Realtisan Weekly Recap – Australia’s Minimum Wage Increased by 3.75% to Curb Inflation

Weekly News

  • Australia’s Minimum Wage Increased by 3.75% to Curb Inflation
  • New Metro Station Plans May Face Challenges – Tunnels Already Constructed
  • Housing Projects West of Sydney’s ‘Latte Line’ Face Challenges

Australia’s Minimum Wage Increased by 3.75% to Curb Inflation

The Fair Work Commission (FWC) has decided to increase Australia’s minimum wage by 3.75% to combat inflation and rising living costs. Effective from July 1, this adjustment will see Australia’s lowest-paid workers receive an additional $33.10 per week, raising the minimum weekly wage for approximately 180,000 people to $915.90. This follows an 8.6% increase last year. Despite the rise, unions remain committed to advocating for higher pay for workers in female-dominated industries.

FWC President Adam Hatcher explained that the decision to raise wages by 3.75% was influenced by the current 3.6% inflation rate. He noted that it was not appropriate to increase wages significantly above the inflation rate at this time. Additionally, the upcoming superannuation guarantee increase from 11% to 11.5% was considered a “moderating factor” in the decision.

Sally McManus, Secretary of the Australian Council of Trade Unions (ACTU), stated that the industrial umpire acknowledged the need for higher wages in female-dominated sectors but had not agreed to immediate implementation. The unions will continue to push for these increases through the FWC’s established processes.

In contrast, the Australian Chamber of Commerce and Industry called for a 2% minimum wage increase, while the Australian Industry Group argued that a 2.8% rise would be a “reasonable balance.”

Although the FWC did not provide a separate increase for female-dominated sectors, Hatcher announced that the commission would set up a program to address gender pay undervaluation in early childhood education and care, disability and home care, other social and community services, dental assistants, medical technicians, psychologists, and pharmacists. This program is expected to be completed before next year’s review.

Opposition employment spokesperson Michaelia Cash criticised the decision, saying it shows wages are barely keeping pace with inflation. She argued that the best way to achieve sustainable real wage growth is to reduce inflation.

Senior Westpac economist Justin Smirk noted that the Reserve Bank of Australia (RBA) would likely be reassured by the FWC’s decision, viewing it as a balanced approach that provides a reasonable real wage increase for workers facing cost-of-living pressures while aligning wage outcomes with labour productivity.

The Treasury has forecast that inflation will return to the RBA’s target range of 2% to 3% by the end of the year.

New Metro Station Plans May Face Challenges – Tunnels Already Constructed

Some suburbs might see new metro stations, but the challenge lies in the fact that the tunnels are already constructed. NSW Premier Chris Minns stated that while he won’t rule out the possibility of building stations at Silverwater or Newington, he first wants to see the outcome of the unsolicited proposal from the racing club regarding the 60-hectare racecourse. If the proposal receives member support and the government can sign an agreement, a metro station will be added at Rosehill. If the proposal fails, other locations will be considered.

Currently, two tunnel boring machines have nearly passed through Silverwater and Newington, leaving twin tunnels with concrete linings on their way to Olympic Park. One of the machines is less than a kilometer from the construction site of the Olympic Park station. Opposition transport spokesperson Natalie Ward stated that modifying existing Metro West line stations would be “very costly,” increasing the construction risk for taxpayers who deserve to know the full costs and benefits of such decisions. She said, “If the government handles this correctly, I hope to see details about these new metro stations in the upcoming budget.”

Transport and planning advisor Alex Gooding agreed that modifying stations around recently built tunnels would be very expensive. He remarked, “Unfortunately, the decision to fill the gap between Olympic Park and Parramatta was not made earlier in the planning process.”

Transport Minister Jo Haylen had previously downplayed the possibility of additional Metro West stations at Silverwater or Newington, stating that the government’s focus is on Rosehill.

Amid the government setting aside $2 billion for the construction of stage two of the Parramatta Light Rail over the next five years, the prospects for Rosehill remain uncertain. The upcoming state budget will include $73 million for preliminary work and a revised business case for the project.

Stage two of the light rail is a 10-kilometer route from Camellia through Rydalmere, Ermington, and Melrose Park to Olympic Park, with 14 stations. Later this year, construction will begin on a 320-meter bridge connecting Melrose Park and Wentworth Point across the Parramatta River. Stage one of the light rail, from Westmead through Parramatta city center to Carlingford, is expected to open to passengers in August.

Minns declined to disclose the opening date for stage two, stating that the project’s timeline and costs must be finalized in the updated business case.

Last year, the NSW Department of Transport estimated that stage two would cost $3.9 billion, in addition to the fully funded $2.875 billion stage one, which had an overrun of $475 million in 2022. The total cost for the entire line would reach $6.8 billion, equivalent to the combined cost of two CBD and South East Light Rail projects.

Housing Projects West of Sydney’s ‘Latte Line’ Face Challenges

Industry Analysis Questions Feasibility of NSW Government’s TOD Plan

According to recent industry analysis, the NSW Government’s transport-oriented development (TOD) plan aims to provide two-bedroom units priced at $1.4 million or more in North Shore suburbs (e.g., Roseville, Lindfield, Killara, Gordon) and Inner West areas (e.g., Ashfield, Croydon, Dulwich Hill, Marrickville, North Strathfield). However, the feasibility of many selected sites is under scrutiny. The report highlights that soaring construction costs and government levies make it difficult to build units in 37 suburbs across Sydney, the Central Coast, and Shoalhaven at prices buyers are willing to pay. Independent experts questioned some cost assumptions in the Urban Development Institute of Australia (UDIA) report but agreed that certain locations would face “significant challenges” in the short term.

In the heated political debate over the housing crisis, the Labor government strongly rebutted the Liberal Party’s legislative efforts to dismantle the plan, arguing that such actions would have a far greater impact on its viability than any “short-term pressures” in the building industry. NSW Premier Chris Minns stated, “It is completely irresponsible to put up this bill without providing any alternative housing plans.”

The UDIA analysis found the plan most feasible in the North Shore and Inner West locations, where buyers are willing to pay a premium. However, in other parts of Sydney, the Hunter region, and the Illawarra, better value housing options can be found, including houses, townhouses, and older apartments at much lower prices.

UDIA CEO Stuart Ayres noted that developers would not build homes they could not sell, suggesting that the TOD plan is unlikely to meet government targets in the current economic environment. He advocated for expanding rather than cutting the plan.

The analysis, conducted with Astrolabe Group, is based on a construction cost of $5,500 per square meter, considered reasonable by developers and industry consultants. It shows that a 90-square-meter, two-bedroom apartment costs $522,000 to construct, plus land cost, planning and legal fees, government charges, and profit. Independent experts pointed out that ongoing construction across Sydney indicates the plan’s viability. Sydney University’s planning professor Peter Phibbs argued that some UDIA assumptions were unrealistic, as developers would not build the same-cost apartments in Tuggerah as in the North Shore. He suggested the plan might work in middle-ring suburbs like Lidcombe or Lakemba but doubted its feasibility in outer metropolitan areas.

The government stated that the TOD plan aims to create 170,000 new housing units over 15 years, with new housing targets relying on the plan delivering a portion of that in the first five years. Planning Minister Paul Scully expressed dissatisfaction with the Liberal Party’s attempt to block the government’s housing reforms, arguing that such actions would significantly impact the feasibility of development and the planning system.

Developers supported the industry’s warnings. Rick Graf, development director at UDIA member Billbergia, noted that it is currently almost impossible to sell properties for more than the cost of building and developing them, especially west of the “latte line.”

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