The economics of Christmas

“A lot of what’s going to be given in return isn’t going to be what people want. Sure, there will be people who will say ‘I will give up my leave loading in return for the right to be a little bit more flexible in my working time, to drop off kids at school etc’. But in effect workers have to buy their own work-family balance by trading away their leave or leave loading.”

It is clear that the original spirit of the Harvester judgment - that governments can and will set a minimum standard of living for workers - is now, if not dead, then well beaten. While the basic argument has always been whether wages need to be set at a level that reflects the needs of the worker, or the capacity of the enterprise to pay, “both sides of politics now accept that such model is uneconomic” says Howe

However the tools now in place to assist the government in helping the low paid are just not as effective. According to Fenwick, “The Fair Pay Commission is in the same position the Industrial Relations Commission was formerly in, which is that it only has one tool to improve the circumstances of the low paid, and that is the wage rise.”

“The burning issue is the impact of the wage rise in net terms for the low paid, because the low paid are also receiving a variety of social security payments that are means tested. This is where you get the circumstance where the one dollar extra in the pay packet awarded by the FPC gets you very little in net terms by the time there’s an offset in your family payments of whatever other social security benefit you’re getting, plus a slight increase in your tax.”

Professor Kevin Davis, the Director of the Melbourne Centre for Financial Studies, is another who is concerned with the increased financial risk faced by people. While acknowledging that financial deregulation has provided substantial and widespread economic benefits to people, “… many individuals do not properly understand or appreciate the risks, costs or rewards associated with the range of financial products available and marketed to them”.

“Government policies are causing or providing incentives for individuals to take on increased financial risk.”

And this is the other key element of WorkChoices and the myriad promises of tax cuts for all workers - that in the end, it’s all very much personal choice. “It’s very difficult to argue against individual choice, but I think what has to be examined more closely is whether people are being given real choice or not. Because we don’t seem to want to have a real welfare state, we’ve wanted to move away from a concept of entitlement to support, therefore we’ve introduced things like the concept of mutual obligation, things like the Welfare to Work initiatives,” says Colin Fenwick.

Dr Howe agrees. “Our social security system has only ever been about poverty alleviation, and whether you can just identify some sort of monetary level at which poverty kicks in. All we’ve ever tried to do is give people enough to keep them right off the very bottom, and that’s counted as a win.”

Perhaps the most pertinent element to consider at Christmas then is just what we are spending our hard earned on. It’s an argument borne out by people such as Professor Clive Hamilton in his 2006 publication Affluenza. For him, Australia is not so much facing a problem of level of income - despite the protestations of the low paid - but facing a much bigger problem of what it is spent on.

According to Dr Howe: “There’s been this whole great growth in materialism over the last decade and that’s the problem that needs to be addressed. People are spending all their money on material goods - plasma TVs - and their quality of life is declining, not withstanding that they have those material goods.”

Mr Fenwick and Dr Howe are both involved in The Social Justice Initiative, a University of Melbourne funded inter-disciplinary research program which examines, among other things, welfare and work.