08/09 state budget announcements

[teflon fox]

The point was that wage growth itself causes inflation as they are passed on to consumers. This is one of the many reasons inflation is a positive feedback loop that once unleashed, is very hard to control. Hence the RBA is mandated to inflict "pain" to keep inflation in check.

Fine- but how is the poor suffering mortgage stressed PAYE wage earner supposed to survive if we can't
even have CPI wage increases ? Are we supposed to gert buried further annually ?

[AtD]

The harsh reality is there is no easy answer in the short term, which again is why inflation is so dangerous. Some critics of the RBA have suggested that the inflation target is unrealistically low, but they forget how quickly inflation can accelerate and eat away at wages.

[teflon fox]

As we are in "the pub" section i would like to have an ale with you one day ATD
to discuss a fair wage system for the average worker. If by getting a wage
rise which only equates to the cost of living annually is not possible as it
accentuates the inflation dragon - what hope is there ?

[AtD]

lol - well it will be interesting to say the least! "Fair" is one of those terms that depend on your point of view! Everyone's out to make a buck!

For the majority of the last decade, wages have been growing faster than inflation and there hasn't been much problem as the economy. Wages, in theory, should be connected to productivity, but this is ridiculously hard to measure, especially in the public sector. In reality, wages are determined by the supply and demand of the skill in question.

And for the record, my wages aren't increasing in pace with the CPI either!

[AG]

lol - well it will be interesting to say the least! "Fair" is one of those terms that depend on your point of view! Everyone's out to make a buck!

For the majority of the last decade, wages have been growing faster than inflation and there hasn't been much problem as the economy. Wages, in theory, should be connected to productivity, but this is ridiculously hard to measure, especially in the public sector. In reality, wages are determined by the supply and demand of the skill in question.

And for the record, my wages aren't increasing in pace with the CPI either!

It'd be near impossible to have wages across the entire labour force increasing in line with inflation. With underlying inflation nudging 4% (IIRC), the increase in wages across the board in different sectors is quite significant. The average annual wage increase in the past couple of years has been quite close to the rate of inflation, but in some sectors where there are significant skill shortages, particularly in construction and engineering, the annual wage increase has been in excess of 7%.

Increasing wages to those in the public sector is quite a balancing act. Too little and there's protests and strikes. Too much and it sets a dangerous precedent of other public sector workers demanding for wage increases and driving the problem of inflation further. What most people don't seem to understand is that if everyone in the public sector suddenly demands a wage increase for reasons of inflation, they probably won't be any better off in the long run anyway.

[Howie]

Btw was anyone at the Property Council meeting? Where the guest speaker was Kevin Foley? I'm told he'd been speaking mainly on building new transport, a new aami stadium, and then said something along the lines of "i'm not sure what else is left to build in the Adelaide" and then someone heckled "how about a city?".

[Benski81]

You have to admit there's something not right when the Govt tries to negotiate wage increases at a rate lower than inflation.

Wages should never, ever, ever be pegged to inflation. If they are, the dollar will be worthless within a decade.

And how should they be pegged ? What happens if you work in a profession that is non-profit - i.e. emergency services. How should
our wages be determined ? `

Wages should be pegged to productivity, the reason we had such high inflation and interest rates previously is because wages were linked to inflation. If a company's wages costs rise because of inflation they pass on the higher cost to consumers through higher prices, which guess what is inflationary. This means then that wages must go up again because inflation has gone up meaning that companies must raise prices to pass on the cost which means wages must rise again in line with inflation etc. It's called the wage - price inflation spiral and is why Paul Keating brought in enterprise bargaining to break this stupid system and subsequently has meant that wage increases are linked to productivity. If workers are more productive or profitable for their employer then their wages can be increased without affecting company profit as much and so they do not have to raise prices and there need be no inflationary effect. The system works and it's why we achieved an inflation rate of around 1% during the 90's.

So then regardless as to who you work for your wages should be determined through a negotiation process and should reflect your value to the organisation that you work for and the scarcity of available substitutable labour. So if for example you're an exceptional para-medic, one of the best, then your remuneration should reflect that however you should never just receive a pay rise because of inflation increases.

Best of luck with it.

[rhino]

And that is precisely why our Public Hospital doctors resigned yesterday. The Govt does not value their productivity. The Public Service is not a profit-generating entity, so should our teachers, nurses, and doctors never get a pay rise because profits have not gone up? Of course not. So they have to be linked to something so that they can be remunerated correctly. They're not linked to similar professions in the private sector, and they're not linked to similar professions interstate, so how do you determine their worth? Answer: It's already been determined, and their remuneration should be increased at least in line with inflation. Companies that operate for profit can work out their own pay schedules, professionally qualified public servants need to be remunerated appropriately regardless of profit or they will be lost to interstate.

[ozisnowman]

Here is a link to the State Public Transport Plan announced in the budget.

http://www.transport.sa.gov.au/pdfs/new ... %20web.pdf

[Benski81]

And that is precisely why our Public Hospital doctors resigned yesterday. The Govt does not value their productivity. The Public Service is not a profit-generating entity, so should our teachers, nurses, and doctors never get a pay rise because profits have not gone up? Of course not. So they have to be linked to something so that they can be remunerated correctly. They're not linked to similar professions in the private sector, and they're not linked to similar professions interstate, so how do you determine their worth? Answer: It's already been determined, and their remuneration should be increased at least in line with inflation. Companies that operate for profit can work out their own pay schedules, professionally qualified public servants need to be remunerated appropriately regardless of profit or they will be lost to interstate.

Agreed Rhino but in this instance the pay increases they are asking for are well above just CPI increases. What was put forward to them by the arbitration commission and the state government was higher than just CPI increases and would put SA doctors amongst some of the highest paid in the country and they're still rejecting it. Given that the cost of living in Adelaide is below that of the eastern states then the rises would see them already in line with pay rates there.

I think this is more a case of these individuals taking advantage of imbalances in the labour market and capitalising on shortages in supply to try and over inflate already artificially high wages. My brother works in emergency at the RAH and most of the doctors he works with are from the UK, America, India etc and when he asked them why they came to work in Adelaide they told him the pay and working conditions are better so it was the obvious choice.

So you've got to wonder.

[rhino]

Fair call about the doctors Benski81, but my post was really in answer to your comments regarding wages being pegged to productivity. Public Servants' (professional or otherwise) wages cannot be effectively pegged to productivity in the same way as the private sector, because the employer (the Government) is not out to make a profit, rather it's providing a service.

[Will]

And that is precisely why our Public Hospital doctors resigned yesterday. The Govt does not value their productivity. The Public Service is not a profit-generating entity, so should our teachers, nurses, and doctors never get a pay rise because profits have not gone up? Of course not. So they have to be linked to something so that they can be remunerated correctly. They're not linked to similar professions in the private sector, and they're not linked to similar professions interstate, so how do you determine their worth? Answer: It's already been determined, and their remuneration should be increased at least in line with inflation. Companies that operate for profit can work out their own pay schedules, professionally qualified public servants need to be remunerated appropriately regardless of profit or they will be lost to interstate.

Agreed Rhino but in this instance the pay increases they are asking for are well above just CPI increases. What was put forward to them by the arbitration commission and the state government was higher than just CPI increases and would put SA doctors amongst some of the highest paid in the country and they're still rejecting it. Given that the cost of living in Adelaide is below that of the eastern states then the rises would see them already in line with pay rates there.

I think this is more a case of these individuals taking advantage of imbalances in the labour market and capitalising on shortages in supply to try and over inflate already artificially high wages. My brother works in emergency at the RAH and most of the doctors he works with are from the UK, America, India etc and when he asked them why they came to work in Adelaide they told him the pay and working conditions are better so it was the obvious choice.

So you've got to wonder.

As a medical student and hence future doctor I would like to clarify the misconceptions that you have written. The figure that is being used by the media, that doctors currently earn $315 000 and want a $100 000 pay increase is simply not true. This is a tactic being used by the state government to cause the people who rely on the Advertiser and Today Tonight to say to themselves "gee aren't those doctors greedy".

In reality doctors earn much less than that. In the public sector, a senior specialist, a person who has devoted many years to learn their knowledge and skills earns at most $162 000. In fact most of the doctors working in public hospitals earn around $90 000 - $120 000. In fact junior doctors start out on a humble salary of $52 000. Some of you may think that these are high salaries, but you fail to understand the difficulty and sacrifice in becoming a doctor. For example at university I have around 32 contact hours per week. Further I have to find an extra 8 hours or so per week to find patients to practice my skills on the wards. And further to this, it does not include the 30 hours per week that I have to do per week of readings, and other 'homework'. Also take into account that we get 7 weeks less holidays than other uni students. Becoming a doctor requires a lot of sacrifice. As such, in order to lure people and retain them in the profession, wages have to compensate our sacrifice and hard work.

[Benski81]

Yeah Rhino I hear you sorry I didn't make my point clear with what I was saying. What I was trying to get at was that there is a negotiation process with checks and balances already and that if they want pay rises they need go through this process. Subsequently in determining pay rates inflation may play a part but it is not a reason for wage increases because you're right this is not a productivity/profitability issue I'm guessing there would be some other qualitative criteria that is used as well.

[Denny Crane]

Btw was anyone at the Property Council meeting? Where the guest speaker was Kevin Foley? I'm told he'd been speaking mainly on building new transport, a new aami stadium, and then said something along the lines of "i'm not sure what else is left to build in the Adelaide" and then someone heckled "how about a city?".

I was there. I can't believe he said that!! He went on and on about how his government have basically built or have put in place a plan that will basically "finish" or "complete" SA. They have built or are planning to build everything that the state needs. Give me a break...

[AG]

Btw was anyone at the Property Council meeting? Where the guest speaker was Kevin Foley? I'm told he'd been speaking mainly on building new transport, a new aami stadium, and then said something along the lines of "i'm not sure what else is left to build in the Adelaide" and then someone heckled "how about a city?".

I was there. I can't believe he said that!! He went on and on about how his government have basically built or have put in place a plan that will basically "finish" or "complete" SA. They have built or are planning to build everything that the state needs. Give me a break...

Building is a never ending exercise. As long as there's change occurring on social and economic fronts, there will always be something that needs to be done by the government. (Thanks Captain Obvious)