STATEMENT

Fair Work Act 2009
s.285—Annual wage reviews to be conducted

Annual Wage Review 2021–22
(C2022/1)

JUSTICE ROSS, PRESIDENT

MELBOURNE 18 OCTOBER 2021

DRAFT RESEARCH PROGRAM

[1] A draft research program for the Annual Wage Review 2021–22 is provided at Attachment A for comment. The draft research program includes a description of the Statistical report and Research reference list.

[2] Submissions to the Fair Work Commission (Commission) regarding the draft research program should be made by close of business on 5 November 2021 and can be filed electronically at awr@fwc.gov.au.

[3] All submissions will be posted to the Commission’s website.

PRESIDENT

Printed by authority of the Commonwealth Government Printer

Attachment A

Annual Wage Review 2021–22
—draft research program

Statistical report

This will follow the format of previous Statistical reports and will be updated throughout the 2021–22 Review as new data are released. Each version of the Statistical report will be available on the Fair Work Commission (Commission) website.

Research reference list

This will follow the format of previous Research reference lists and will include Australian and international literature, such as working papers, journal articles or other types of published reports relevant to the minimum wages and modern awards objectives. The list will initially cover literature published following the Annual Wage Review 2020–21 and be updated throughout the 2021–22 Review.

Research report

Experimental estimates for a Consumer Price Index for low-paid households

The Australian Bureau of Statistics’ (ABS) Consumer Price Index (CPI) measures quarterly changes in the price of a ‘basket’ of goods and services. The goods and services of the CPI basket are weighted based on the amount of expenditure by the average household on these goods and services. These weights are derived from the ABS Household Expenditure Survey (HES). This research would explore and develop a CPI for low-paid households by deriving an index based on the expenditure patterns of low-paid (employee) households using the HES and tracking the prices of these items over times using the CPI. This would provide support to measuring the impact on, and needs of, low-paid households.

Future research

Budget standards for the low paid

The Annual Wage Review 2019–20 decision referred to budget standards as one consideration when assessing the needs of the low paid, including a 2017 report by the Social Policy Research Centre at the University of New South Wales that priced budgets in 2013. 1 It was acknowledged from the report that ‘beyond the seven-year time horizon, it is preferable to review and revise the entire budgets to ensure that items, quantities and lifetimes as well as prices are reviewed and adjusted to reflect changes in community norms and average living standards’.2

In recent annual wage reviews, the budget standards from the 2017 report have been updated based on the Consumer Price Index. The Commission intends to review and revise the budget items in the 2017 report. The research will expand on the previous report by including feedback from a broader section of the community (both low-paid and middle-income households) and a supplementary budget of discretionary items which might be considered expenditures required to participate in Australian society. This will be externally commissioned for publication in late 2022.

Accessing ABS data sources

The Commission continues to engage with the ABS to explore opportunities to use and link various data sources to undertake research topics relevant to the minimum wages and modern awards objectives. Research proposals and expectant projects will be communicated in due course.

1 Saunders P & Bedford M (2017), New minimum income for healthy living budget standards for low-paid and unemployed Australians’, SPRC Report 11/17, Social Policy Research Centre, UNSW Sydney.

[2019] FWCFB 3500 at [306].

In the Annual Wage Review 2021-22, the Fair Work Commission considered a draft research program aimed at informing its decisions regarding the annual minimum wage review. The Commission invited submissions on the draft program, which included plans for a statistical report and a research reference list. Submissions were due by 5 November 2021, and all submissions were to be posted on the Commission’s website. The draft research program outlined several key areas of focus, including the development of a Consumer Price Index for low-paid households, a review of budget standards for the low paid, and exploring ways to access Australian Bureau of Statistics data sources.

The legal issues before the Fair Work Commission involved ensuring that the minimum wage adjustments reflected the economic circumstances of low-paid workers and their families, and aligned with the objectives of the Fair Work Act 2009. The Commission had to consider how best to measure the impact of price changes on low-paid households and assess their needs more accurately. This included determining the most appropriate method to derive an index based on the expenditure patterns of low-paid households and how to revise budget standards to reflect current living costs and community norms.

The Commission's reasoning focused on the necessity of comprehensive and updated research to inform its wage-setting decisions. The Commission recognised the importance of basing its decisions on accurate and relevant data that reflect the living costs and needs of low-paid workers. The proposed research aimed to provide a more nuanced understanding of the economic pressures faced by low-paid households, which in turn would support fairer and more informed wage adjustments. The Commission also highlighted the need for ongoing engagement with the Australian Bureau of Statistics to leverage relevant data sources effectively.

The Fair Work Commission decided to proceed with the proposed research program, setting a timeline for the completion of the statistical report and the research reference list. The Commission also planned to commission further research on budget standards for the low paid, aiming to include a broader community perspective and supplementary discretionary budget items. The final orders included a call for submissions on the draft research program by the specified deadline, with all submissions to be published on the Commission's website.

Annual Wage Review 2021–22

STATEMENT

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established