ACTU calls for inflation policy overhaul ahead of jobs summit

Australia’s top economic goal should be that everyone has the chance to find a secure and fairly paid job, the nation’s peak union body says.
The Australian Council of Trade Unions will push the federal government to make achieving “full and secure employment” its number one priority at the upcoming jobs summit on September 1.
The event will aim to bring together employers, interest groups and unions to find “common ground” on enterprise bargaining and other issues in a bid to boost productivity and get wages moving.
Australia’s unemployment rate is 3.5 per cent – its lowest since August 1974, with some 480,000 job vacancies and 494,000 officially unemployed people.
But the ACTU argues that while the unemployment rate is historically low, real wages are falling quickly and insecure work is rife.
“Working people have suffered through nearly a decade of insecure work and stagnant wages, only now to be met with historically high inflation delivering massive real pay cuts,” ACTU secretary Sally McManus said.
“We can choose to build an economy which gives a greater share of the national wealth to the people who create it and delivers rising living standards for all Australians.”
The ACTU on Tuesday released the first of a series of research papers it has prepared to outline its demands prior to the jobs summit in Canberra.
The paper calls for a “fairer and more comprehensive” inflation-reducing policy which protects incomes, prevents price gouging and tackles inflation in energy, housing and childcare partly through increased regulation.
Among its other recommendations is that the government instruct the Reserve Bank of Australia to pursue full employment in balance with its target of keeping inflation at 2 to 3 per cent.
The RBA last week raised the country’s cash rate for the fourth month in a row, to 1.85 per cent, causing more pain for borrowers in its bid to curb inflation, which has surpassed 6 per cent and seen the price of groceries reach dizzying heights.
Economist for progressive think tank The Australia Institute Jim Stanford, who advised the ACTU on its report, says inflation control should no longer be the central bank’s sole responsibility through adjusting interest rates.
“One of the problems with relying so much on the interest rate, as the one and only sledgehammer in your toolbox to try and control inflation, is (that) it’s completely indiscriminate,” Dr Stanford said.
“So it inhibits borrowing by people who are doing something useful, like building new housing supply or improving supply chain infrastructure.”
Dr Stanford said the Albanese government should use its upcoming review of the reserve bank as an opportunity to critically examine its inflation targeting system.
“I think that what we’re proposing is a shift in the operational directions to the bank … to recognise that it has to pursue multiple goals, not just a certain magic rate of inflation,” he said.
“Everybody says the RBA is independent. That’s not remotely true. The RBA is a creature of the government. It operates according to legislation set by the government.”
The federal government is expecting inflation to peak at an annual rate of 7.75 per cent by end of the year and then fall gradually, allowing real wages growth to begin.

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