In a Treasury minute, dated October 6 and prepared for Mr Costello,Treasury has concurred with my judgment about the negative effect of the WorkChoices IR legislation. Treasury states that labour productivity levels will fall in the short term as employers hire greater numbers of less efficient workers and that any increases in the minimum wage are likely to be smaller than under the old system because of smaller increases granted by the Government's new Fair Pay Commission.

This contradicts the public claims by the Treasurer and Prime Minister John Howard made inside and outside Parliament that the workplace changes passed this month will boost wages and jobs and unleash a wave of labour productivity growth.

Treasury argued that the economic benefits of overhauling the nation's industrial relations system are long term:--they will boost jobs and productivity.-


Bill Leak

The economic reality is that Australia has a high minimum wage in relation to other any developed countries, and this is a barrier for businesses in hiring low-skilled workers. Hence one of the designed effects of the IR reforms is to reduce the minimium wage and working conditions. That means lower income earners are going to lose money in the new world of WorkChoices.

Costello is begining to only look good in the narrow sense of being the Parliament's best performer on the floor of the House. The implication is that Costello is failing to broaden his public persona to convince his parliamentary colleagues that he is capable of being prime minister. He remains as Treasurer.