Christopher Pearson: Poverty of church ideas

October 22, 2005 AT least one unambiguously good thing is going to come out of the debate over industrial relations reform. The churches and their social welfare agencies are going to have to decide where they stand on the problem of unemployment.

In saying so, I should make it clear from the outset that I’ve often taken the Howard Government to task on the subject. There was never any excuse for the way it set targets for growth and inflation but not for employment. Nor has it yet put much effort into sorting out well-documented, plainly perverse tax and transfer interactions, which are significant disincentives for some people moving from welfare to work.

But at long last the Coalition has decided to get serious about structural unemployment. The new Fair Pay Commission is going to set minimum rates for a single person’s earnings. The era of the Harvester judgment, with its baleful legacy over almost a century of industrial relations, is coming to an end. No one is going to be arbitrarily priced out of the labour market any more.

In 1907, in the Harvester judgment, justice H.B. Higgins defined minimum wages in terms of an entitlement: enough to keep a married man with three children in modest comfort. It didn’t matter if you were single or in some other way failed to fit the one-size-fits-all paradigm. You still got the same pay and couldn’t work for less, whatever your circumstances. The Harvester precedent uncoupled any notion of what you were actually worth – to the person hiring you – from what he had to pay. It artificially raised the floor price of labour and has been a leading cause of unemployment, especially in small business. It has also functioned as a disguised form of welfare for marginally employable people, in which the employer willy-nilly footed the bill.

The Fair Pay Commission will take existing minimum wages as a benchmark. But through time it will reduce minimum rates because it will no longer be forced to take into account Harvester’s four hypothetical dependents. Harvester’s contemporary equivalent, the living wage, to some extent has been superseded already by transfers such as Family Tax Benefits A and B, child payments and the maternity allowance, which can significantly supplement low incomes.

According to recent Treasury figures, the tax treatment of low-wage family incomes has also changed to the point where many dual-income households with two children pay no net tax below a threshold of $47,000.

Eventually minimum wages will be set at levels designed to clear the market. If those wage rates aren’t high enough to provide properly for individual workers and their dependents, the gap is plainly going to become a responsibility of the welfare system and the public purse rather than employers.

Shifting that responsibility away from employers, who should never have been saddled with it in the first place, is a just outcome for them and for all those who, perhaps for the first time, will enjoy the benefits that come from participating in the work force.

Yet some of the leaders of the main denominations don’t seem to get the point.

Dean Drayton, the president of the Uniting Church, says the Fair Pay Commission’s mandate “is to keep wages low rather than assess what workers need to live a decent life”, which strikes him as “incompatible with Christianity. Christians are called to challenge systems and structures that breed hate, greed, oppression, poverty, injustice and fear. Anything less than this is a watered-down expression of our faith.”

My guess is that this kind of quasi-Marxist rant doesn’t cut much ice any more, even among Drayton’s rapidly dwindling flock, but let’s consider the ethics of the question. Take, for argument’s sake, the parallel case of sheltered workshops for the physically or intellectually handicapped, where government intervention to subsidise wages isuncontentious.

Society recognises the sense of self-worth people in sheltered workshops get from gainful employment and reducing the burden on the welfare budget. Aren’t the long-term jobless, the borderline unemployable and unskilled workers in pretty much the same boat and deserving of the same sort of wage top-up from the state? Why, in the name of abstract notions of wage justice, should the churches help to keep people locked out of the workplace and dole-dependent?

The same abstract notions bedevil the Catholic Church’s response to minimum wages. John Ryan, the executive officer of the Catholic Commission for Employment Relations, has just written a paper, The Common Good and Industrial Relations. In it, he writes that “Catholic social teaching calls for the fixing of a wage that is based on the needs of a family, not the needs of a single person”. This is offered as though it were one of the proverbial “laws of the Medes and the Persians, never to be repealed”.

Yet Catholic social teaching changes and develops through time, responding to emerging circumstances. John Paul II overhauled the church’s position on the role of the market economy, for example. It’s hard to imagine the encyclicals Ryan has in mind were written in the era when a dual-income family was becoming normative and significant welfare transfers were broadly available to help support dependents.

Ryan’s position is schizoid. On the one hand, he acknowledges the growing role of the public purse in providing for dependents of workers, including those on minimum wages. On the other, he continues to maintain that the Fair Pay Commission’s preparedness to take into account the needs of families is the test by which it should be judged and, ipso facto, bound to fail.

Ryan also flirts with the idea that an artificially inflated wage, propped up as it has been for so long by the Australian Industrial Relations Commission, is preferable to a realistic wage topped up by social security. The latter is sometimes said to be demeaning to the dignity of labour.

There may have been some emotional force to this sort of argument in the days when there was a stigma attached to taking government handouts or the dole. Longstanding transfers such as child endowment and, more recently, family tax benefits and maternity allowances have put paid to all that.

Besides, most people on minimum wages are likely to have spent time on unemployment benefits and to be well aware of the difference between working life and involuntary idleness.

Another denomination, the Salvation Army, entered the fray last week. One of its spokesmen, John Dalziel, announced that IR changes to lower minimum wages were “not ethical because they would exploit the most disadvantaged. The Salvation Army deals with people who are desperate and I can assure you that a desperate person will be quite willing to accept the most basic conditions to get their rung on the ladder.”

I’ve written before about the ways in which leading charities end up being captured by the wet Left. Even by their standards, Dalziel’s posturing is remarkable. He knows — far better than they do themselves, poor dears — what’s best for people on the dole. Although they’re to be offered a rung on the ladder, he’s in there denouncing the deal as unethical, before the Fair Pay Commission has even been appointed or the mechanisms for providing welfare top-ups to minimum wages have been properly canvassed.

Plainly Dalziel is far more concerned about the wider industrial and political consequences of lowering the floor on minimum wages than about the people who stand to benefit from the jobs it will generate. It was something of a relief to hear Workplace Relations Minister Kevin Andrews showing some passion for a change in reply: “I think the primary responsibility of government is to create conditions under which as many Australians as want a job can get a job.”

http://www.theaustralian.news.com.au/common/story_page/0,5744,16990552%255E7583,00.html