
Federal government backs wage increase for millions of Australia's lowest-paid workers
Treasurer Jim Chalmers wants to ensure Australia's lowest paid workers don't go backwards, but stresses a real wage rise must not harm the economy.
In its formal submission to the Fair Work Commission's annual review of minimum and award wages, the federal Labor government said those workers should receive an 'economically sustainable real wage increase'.
WATCH THE VIDEO ABOVE: Federal Government pushes for pay rise for millions of workers.
The government did not nominate a specific figure, in keeping with past practice.
Real wages growth means workers' pay packets increase faster than prices rise in the economy, ensuring they are better off overall.
But without accompanying growth in productivity, wage increases exceeding inflation could drive prices higher.
The government's expanded emphasis on 'sustainable' real wages growth in this year's submission, compared to the previous year, dovetails with Chalmers' comments that there will be a greater focus on boosting productivity during Labor's second term.
Chalmers said he consulted with Reserve Bank governor Michele Bullock to make sure its submission was consistent with inflation staying within the central bank's target band of two to three per cent.
'We want to make sure that this real wage increase is provided consistent with our other economic objectives, (including) getting inflation down,' he told reporters in Brisbane.
'We have made a lot of progress there, but it's not mission accomplished, because people are still under pressure.'
About 2.9 million employees are affected by the review, with the majority of those on industry and business-specific awards as well as a smaller proportion on the minimum wage.
The Australian Council of Trade Unions went further than the government, calling for a rise of 4.5 per cent — higher than last year's increase of 3.75 per cent, when inflation was still running hotter than the RBA's target.
Business groups are calling for a more modest increase of between 2-2.6 per cent.
In its submission, the Australian Industry Group said the economy was in a fragile position, exacerbated by sluggish productivity and uncertainty caused by US tariffs, and an excessive wage rise could drive up unemployment.
The RBA has expressed concern Australia's tight labour market could push up inflation, with higher pay rises flowing through to cost pressures for businesses.
In the long term, it is hard for an economy to support real wage growth without productivity growth, the central bank's head of economic analysis Michael Plumb said in a speech at an Australian Business Economists conference in February.
Driving real wage growth
Data released by the Australian Bureau of Statistics on Thursday showed the unemployment rate remained at a historically low 4.1 per cent in April. That has helped annual real wages grow for the past 18 months.
But Australia's productivity growth has cratered in recent years.
'The government recognises the importance of lifting productivity to drive real wages growth over the long term and is implementing a significant productivity agenda,' its submission stated.
The Fair Work Commission has delivered $143 a week in minimum wage increases since the Albanese government came to power in 2022.
Increasing awards and the minimum wage above growth in market wages should also help narrow the gender pay gap given women are disproportionately represented in lower-paid, award-reliant jobs.
A landmark ruling by the commission in April meant workers in female-dominated industries such as health and childcare would receive substantial pay rises of up to 35 per cent.
Chalmers said the government had provided billions of dollars to help fund previous pay rises for childcare workers but would not confirm whether taxpayers would be further called upon to help employers following the ruling.
The Fair Work Commission is due to hand down its annual wage review decision in June.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

Sydney Morning Herald
18 minutes ago
- Sydney Morning Herald
‘We have a mandate to act': PM throws open doors to bolder agenda
Prime Minister Anthony Albanese has thrown open the doors to a more daring economic reform agenda, convening a summit later this year to kickstart Australia's stuttering economy. As he set guard rails for his upcoming negotiation with US President Donald Trump on tariffs, Albanese revealed he would bring union and business bosses together in August to chart a path to a more prosperous society after years of flatlining living standards and productivity. The government did not speak of the roundtable before its election win, the size of which has spurred calls from economists, think tanks and some MPs for Labor to consider broader reform to tackle issues such as reducing the reliance on income taxes. 'The commitments the Australian people voted for in May are the foundation of our mandate, they are not the limits of our responsibilities or our vision,' Albanese said in his first major speech since his generational 94-seat win. 'We want to build the broadest possible base of support for further economic reform … Our government has secured a mandate to act.' Loading Holding the economic summit, as Labor did in its first term on industrial relations policy, could hand Albanese and Treasurer Jim Chalmers more authority to pursue bolder policies than those it took to the election. Chalmers has been emphasising the productivity problem since the election, while Housing Minister Clare O'Neil and assistant minister for productivity Andrew Leigh have both recently taken aim at red tape, suggesting a new focus on growth after facing criticism for allegedly over-regulating and over-spending last term. Labor ministers have stressed their policies on childcare, school funding, green energy and housing were already ambitious, but they have faced calls to examine major issues such as the GST, property taxes and the company tax rate.

The Age
18 minutes ago
- The Age
‘We have a mandate to act': PM throws open doors to bolder agenda
Prime Minister Anthony Albanese has thrown open the doors to a more daring economic reform agenda, convening a summit later this year to kickstart Australia's stuttering economy. As he set guard rails for his upcoming negotiation with US President Donald Trump on tariffs, Albanese revealed he would bring union and business bosses together in August to chart a path to a more prosperous society after years of flatlining living standards and productivity. The government did not speak of the roundtable before its election win, the size of which has spurred calls from economists, think tanks and some MPs for Labor to consider broader reform to tackle issues such as reducing the reliance on income taxes. 'The commitments the Australian people voted for in May are the foundation of our mandate, they are not the limits of our responsibilities or our vision,' Albanese said in his first major speech since his generational 94-seat win. 'We want to build the broadest possible base of support for further economic reform … Our government has secured a mandate to act.' Loading Holding the economic summit, as Labor did in its first term on industrial relations policy, could hand Albanese and Treasurer Jim Chalmers more authority to pursue bolder policies than those it took to the election. Chalmers has been emphasising the productivity problem since the election, while Housing Minister Clare O'Neil and assistant minister for productivity Andrew Leigh have both recently taken aim at red tape, suggesting a new focus on growth after facing criticism for allegedly over-regulating and over-spending last term. Labor ministers have stressed their policies on childcare, school funding, green energy and housing were already ambitious, but they have faced calls to examine major issues such as the GST, property taxes and the company tax rate.


Canberra Times
33 minutes ago
- Canberra Times
Average Australian home now costs $1 million
The average price of an Australian home has now reached an eye-watering $1 million. The average price of an Australian home has now reached an eye-watering $1 million. Pic: Shutterstock That is the finding from the Australian Bureau of Statistics, which said the record price for Australian dwellings came in the March quarter of 2025. "The national mean price of residential dwellings passed $1 million for the first time in the March quarter 2025, rising 0.7 per cent to $1,002,500," Dr Misha Tan, ABS head of finance statistics said. "Western Australia, South Australia and Queensland were the main drivers of the rise , with Queensald reaching the second highest mean price in Australia, behind New South Wales." While the national average house costs $1 million, prices vary from state to state. Source: ABS NSW dwelling prices, which include both houses and units, remained in front with an average price of $1.245 million. It is the only state with an above $1 million price tag, despite the national mean now hitting over $1 million. Next in line is Queensland where the average home will set you back $944,700 according to the ABS. The ACT has seen its home prices drop over the last year, in the March quarter 2024 it stood at $951,800 but this year had dropped to $944,700. WA, which has seen strong growth jumped nearly $100k in the same time, with the mean dwelling price of $869,200. Victoria has also seen a drop in prices over the past year. It went from a mean dwelling price of $911,800 in the March quarter of 2024 to $899,700 this March quarter 2025. The rise of the national home price came in a period when the RBA had made its first cut for 2025 in February. Pic: Shutterstock The rise of the national home price came in a period when the RBA had made its first cut for 2025 in February. It cut rates again in May, taking the cash rate to below 4 per cent for the first time in two years. The total value of Australian housing has also jumped. Source: ABS And while there was strong growth in prices in the three months to March, yearly growth in prices were down. Despite the quarterly rise in national dwelling value, annual growth in the March quarter slowed to 5.9 per cent. This was down from 9.5 per cent in March quarter 2024', Dr Tan said. Quarterly growth was seen across all states and territories, and most evident in Queensland (+1.9 per cent) and South Australia (+1.6 per cent). The total value of all Australian homes also rose in the March quarter according to the ABS. It reported that the total value of Australia's residential dwellings rose by $130.7 billion (1.2 per cent) to $11.4 trillion in the March quarter.