In a recent interview on ABC radios's AM program Opposition Leader Tony Abbott said 'low and middle income families with kids are Australia's new poor'.
Abbott is half right. He is right in regard to low income families who are dependent on a safety net wage for their standard of living. They are newly poor because of changes that have occurred in the Australian wages system over the past decade or so; a period which should have delivered better outcomes.
One in six Australian workers is paid no more than the prescribed minimum safety net rate of pay set for their work classification. These workers haven't the capacity to bargain for higher rates and are typically non-union members.
From December 2000 to December 2009, safety net wages declined relative to community wages. In that time Average Weekly Ordinary Time Earnings (AWOTE) increased by 53.2 per cent, to $1,223.30 per week, and the Consumer Price Index (CPI) increased by 29.1 per cent.
Yet over the same period safety net workers who are now paid more than $645.00 had real wage cuts and all safety net workers fell behind average wages. Workers on the Federal Minimum Wage (FMW), now at $543.78 per week, received an increase of 35.8 per cent, and those now on $835.00 per week only received 19.3 per cent.
The position of low income safety net-dependent families has declined relative to better paid working families even after taking into account income tax cuts and increases in family payments.
The disposable income of a single breadwinner FMW-dependent family of four (including two children of primary school age) has increased by 47.6 per cent to $742.75 per week, including family payments of $245.58. A similar family which is dependent on a wage of $645.00 per week has had an increase of 44.7 per cent.
However, the AWOTE-dependent family has had an increase of 62.3 per cent in its disposable income and is now at $1,117.78 per week. Family payments have been pushed into the middle income groups. The loss of safety net-dependent families relative to the AWOTE middle income family has varied; for example, $74.22 per week at the FMW and $103.32 at a wage of $645.00 per week. This shows that Abbott's claim is half wrong.
The standard of living of low income families has even