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Australia Needs A Maximum Wage To Improve The Lives Of Working People


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- Paul Bastian | The Huffington Post (AU)
Countless column inches have been dedicated to the breakdown of our political equilibrium over the past 12 months. But should we really be that surprised?

Last year, you're likely to have received the smallest pay increase in three decades. You could be one of the millions of people forced to abandon the Australian dream of owning your own home. You might also be one of the 700,000 retail or hospitality workers who just had their Sunday penalty rates cut.

All this, while Australia's two richest people now own more wealth than the poorest 20 percent of the entire country's population. Meanwhile, the top 20 percent of households receive half the country's income, while the bottom 20 percent brings in just four percent.

These statistics point to a growing divide between rich and poor in Australia. The rich are getting richer and working people aren't getting their fair share. And unlike wealth, inequality does trickle down. Money that is hoarded by the rich is money that can't be spent in our schools, our hospitals, on the most vulnerable in our society.

Why should working people bear the brunt of cost-cutting measures in a society that is so manifestly skewed against them?

Unsurprisingly, successive Liberal governments have done nothing to address this. Opportunities to implement corporate tax reform that could help close the wealth gap have been ignored. Negative gearing remains in place, pushing home ownership out of reach for many. And meanwhile, year after year we see attacks on working people: threats to penalty rates, cuts to Medicare, and the gutting of frontline welfare services -- all done in the name of the bottom line.

Why should working people bear the brunt of cost-cutting measures in a society that is so manifestly skewed against them?

If the Government is serious about improving our country's economy, bold and fair economic reform is needed.

Many options are on the table. We've heard talk of Labor introducing a Buffett Rule, to force the highest income earners to pay a minimum rate of tax. This would add $2.5 billion to the budget bottom line and tackle inequality head-on.

Tim Ayres, AMWU NSW State Secretary, recently argued for a universal inheritance tax that would fund a one-off capital grant for every citizen at the age of 25.

There are other options too.

Capping the incomes of the ultra rich by mandating a maximum wage would directly improve the lives of working people. Lawrence J Hanley, International President of the Amalgamated Transit Union, argues for a maximum wage system that would tie the income of an employee to that of their boss.

Bold, brave, and effective economic policies are there for the taking -- cutting corporate excesses by capping income would be a good start.

Under this system, Gina Rinehart's income, for example, could be limited to no more than 100 times the wage of her lowest-paid worker. If she wanted to give herself a pay rise, then that worker would receive an equivalent rise, and so on up the ladder of the company.

American ice-cream moguls Ben Cohen and Jerry Greenfield ran with a similar ratio system at their company, Ben and Jerry's, for 16 years. Until Ben retired in 1995, no employee's pay exceeded five times that of an entry-level employee. When asked about his company's pay scale, Greenfield said: "If you open up the mind, the opportunity to address both profits and social conditions are limitless."

The fight against inequality is complicated. Tinkering at the edges of our economy is no longer enough. Bold, brave, and effective economic policies are there for the taking -- cutting corporate excesses by capping income would be a good start.

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