What the hell is wrong with us? We claim this is the land of a fair go, a place rooted in decent values, yet we’re screwing hundreds of thousands of the community’s most valuable contributors, while paying hundreds of thousands of dollars to people who add less real value.
People are understandably preoccupied, even obsessed, by money. Often they’re among the masses struggling to pay for the essentials, amid relentlessly rising costs for energy and housing, and shackled by stagnant real wages which, the Governor of the Reserve Bank, Dr Philip Lowe, said as recently as Thursday will prevent any flexibility in the key policy tool of interest rates. At the other, much less-populated end of the scale, fortunes are being accumulated. A few days ago, when The Age published a column about median income and wealth by Money editor Caitlin Fitzsimmons that linked to a comparative calculator on economist Matt Cowgill’s website, the thing crashed, such was the demand to find financial rankings. Angst, insecurity, greed and envy are a potent mix.
I don’t want to have an unfair go at, say, stock and bond brokers and investment managers; indeed good luck to them. But clipping the coupon, in the case of the former, and convincing the people to pay for picking investments, in the case of the latter, is of limited inherit value.
Yes, good luck to them. Financial markets and institutions per se play a pivotal role in the economy, even if they are riddled with dubious operators. Think that’s a bit harsh? Well, have a look at the evidence of bountiful malfeasance already emerging from the financial services royal commission, which happened in no small part because of investigative work led by The Age’s Adele Ferguson. But the point is not that scrupulous money traders and managers should earn less. It is that our labour market fails to properly price the value of, in particular, teachers, nurses and staff in aged-care and childcare facilities.
The pay parsimony is curious, given everyone seems to agree these professions are economically and socially crucial. It is a huge responsibility to care for a babies and toddlers, to educate a child, to salve the sick, to tend the elderly. Everyone, of course, agrees about that – until you suggest we might actually remunerate these people justly by aligning price (wage) with value (output). The average annual full-time salary in Australia is about $82,000. High-school teachers’ salary ranges from $46,000 to $95,000. Yep, high-school teachers at the top of their profession earn less than many assistants to corporate executives. Let’s not even go near the issue of the remuneration of the executives themselves. Let’s also leave aside the rampant wage fraud, the stealing from some of the nation’s lowest-paid workers, usually migrants and students, within the $170-billion franchise sector, a travesty also uncovered by Ferguson and others in our newsroom.
Good luck to the executive assistants – and don’t forget so many of them face harassment and worse (#MeToo, anyone?) – but what does that relativity say about us? Nurses’ average annual salary is $65,000. Childcare workers – about $20,000. Aged-care workers – $45,000. And that’s in an industry where more investigative work by, yes, Ferguson et al here has revealed many aged care companies are ripping off vulnerable people and are not even providing an adequate service, largely because of unduly tight staffing levels.
These nursers, teachers and carers are essential-services staff in one of the wealthiest nations. Central to Australia’s prosperity is the opportunity to be richly rewarded for taking risks, for investing in creating a business and employing people; and employment is arguably the greatest form of social justice. But central, too, to that prosperity are those whose essential work provides many of the rungs in the national ladder of opportunity. Contrary to the self-serving complaints about taxes by so many of the wealthy, many of whom legally but unethically pay tricky accountants to exploit the rules to avoid tax, and contrary to the dissembling by blinkered ideologues about "big-taxing, big-spending" governments, the truth is we are a nation with a relatively small government both in terms of tax and spending. It is in this nation’s enlightened self-interest to improve the lot of these underpaid facilitators of economic growth. They should get a mixture of pay rises and income tax cuts – it’s not only just, it would stimulate the economy far more than, say corporate tax cuts, because low-paid people spend pretty much all extra income, boosting consumption and demand. There’s nothing wrong with corporate tax cuts, but they should not take priority over hefty income tax cuts to those most in need and best placed to give the entire economy a boost.
Meanwhile, surely a better way to look at contributing fairly to the tax system was articulated close to a century ago by US Supreme Court Justice Oliver Wendell Holmes Jr.: ``I like to pay taxes. With them, I buy civilisation.’’
Michael Short is The Age’s chief editorial writer, a former business editor of the paper and a former Melbourne chief of The Australian Financial Review.
Michael Short is The Age's chief editorial writer, as well as a columnist. He is a board member and ambassador of a number of organisations, and is a frequent public speaker and moderator. He is generally bemused, and is thus particularly grateful to his wife Sophie and their three children Edie, Tom and Clem for trying patiently and tenderly to help him through the whole thing. He quite likes open fires, walking his dog and sitting for long periods in the bath.
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