Former RBA governor Bernie Fraser attacks penalty rate cut

Bernie Fraser
Contributed by Ben Wilson

Former Reserve Bank boss Bernie Fraser has savaged the Fair Work Commission’s cuts to penalty rates and the Turnbull government’s company tax cuts, saying the measures will further entrench inequality but do little to produce jobs and growth.

He says that Australia is approaching a “danger point” where the gap between rich and poor becomes so vast it could have “awful” far-reaching consequences at every level of Australian society.

Fraser, who was the head of Treasury for five years before serving as RBA governor from 1989 to 1996, is one of 75 prominent Australian economists and academics who have joined forces to pen an open letter deeply critical of the cut to some Sunday penalty rates.

The letter – signed by leading economists from universities, think tanks and consultancies across the country – says the decision will not deliver any meaningful boost to employment and will ultimately undermine household incomes and national economic growth.

“While it is doubtful that lower penalty rates will result in any measurable increase in total employment in the retail and hospitality industries there is no doubt that this decision will reduce incomes for some of the most insecure and poorly paid workers in the economy,” it reads.

But Bernie Fraser has gone even further, extending his criticism to the government and the business community for supporting the cuts.

“It was another illustration of what I’m afraid is an increasing trend towards unfairness in so many ways in policy matters,” he said. “Some people now have much more than they really need and so many more have not even enough to get through.

“And you contrast that with the government’s position to commit – at this stage – $25 billion to reduce company taxes. Who are the recipients of those cuts?

“The main recipients will be the dividend holders – not traditionally a disadvantaged, vulnerable section in the community. And the other people who will benefit will be the senior executives of those companies giving themselves bonuses.

“All the while the vulnerable people are being squeezed at the other end.”

He also says the company tax cuts will deliver minuscule benefits off “in the never never”. Meanwhile the inequality gap is only widening as the ruling class looks after themselves rather than the vulnerable and needy.

The genuine gains in income and wealth of the 1960s, ’70s and ’80s are being steadily eroded.

“Since the late ’80s it’s all reversed and it’s getting worse and that worries more in terms of implications for opportunities and for the way different groups are going to struggling the future and the broader consequences for society might be.

“We’re not quite at the danger point yet but we’re moving in that direction – and that’s a real worry.”




1 Comment on "Former RBA governor Bernie Fraser attacks penalty rate cut"

  1. Thank you Bernie,a sensible economist at last.

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