The Australian Fair Pay Commission (AFPC) was an Australian legislative body that existed from 2006 to 2009. It was created under the Howard Government's "WorkChoices" industrial relations laws in 2006 to set the minimum pay for workers. Established to replace the wage-setting functions of the Australian Industrial Relations Commission, the AFPC set and adjusted a single adult minimum wage, non-adult minimum wages (such as training wage), minimum wages for award classification levels, and casual loadings. The AFPC was abolished in December 2009 and the wage-setting function passed to the minimum wage panel of the Fair Work Commission. The minimum wage in Australia as at 31 July 2011 was $15.51 per hour or $589.30 per week. As at 1 July 2012, the minimum wage was $15.96 per hour or $606.40 per week.
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Professor Ian Harper was the inaugural chairman of the AFPC, presiding over 4 commissioners: Mr Hugh Armstrong, Mr Patrick McClure AO, Mr Mike O’Hagan, and Honorary Professor Judith Sloan.
The profile of the members of this commission was different from that of the Australian Industrial Relations Commission which previously had responsibility for determining the above quantities. There was less representation on behalf of trade unions, and less transparency in decision-making, making it possible for the AFPC to make judgements with no community oversight or consultation. Unlike the Australian Industrial Relations Commission, the Commission funded substantial research on the economic effects of raising the minimum wage, and proponents claimed that this placed more of an emphasis on determining whether the economic evidence suggested that raising the minimum wage made the poor better off.
Critics argued that the board lacked independence and scope and that it reduced the benefits of workers, while supporters believed that it helped to stimulate the economy and improve working conditions.
2006 decision
On 26 October 2006, the AFPC handed down its first decision. The AFPC's media release stated:
The Australian Fair Pay Commission today announced an increase of $27.36 per week in the standard Federal Minimum Wage and in all Pay Scales up to $700 per week. This covers just over one million Australian workers who rely on the Commission’s decisions for adjustments in their wages.
The Commission also awarded an increase of $22.04 per week to all Pay Scales paying $700 per week and above, or more than $36,000 per year, representing another 220,000 workers, about 2% of the workforce.
In hourly terms, the Australian federal minimum wage increased to $13.47 per hour (for workers on pay scales of less than $700 per week), with effect on 1 December 2006.
Many commentators were surprised that the AFPC's first decision was so generous. For example, the Australian Council of Trade Unions had asked for a minimum wage increase of $30 per week. Despite this, the rise barely kept up with inflation since the previous pay rise handed down by the AIRC in June 2005.
2007 decision
On 5 July 2007, the AFPC handed down its second wage decision. The decision increased minimum wages from $13.47 to $13.74 per hour, or $10.26 a week for wages below $700, and by $5.30 for wages above $700. The rise took effect from the first pay period commencing on or after 1 October 2007. This was a change of policy from the AFPC's first decision, which took effect on the 1 December 2007 and was criticised by employer groups for causing difficulties for businesses, which had to implement a pay rise within a pay period. Traditionally, the Australian Industrial Relations Commission implemented wage and allowance rises from the first 'pay period commencing' from a set date.
The AFPC took into account the time period between the inaugural and second wage decisions, and other factors including tax cuts announced in the budget that took effect from 1 July 2007. The AFPC, whilst considering these matters, did not discount the wage increase on account of tax cuts.
Another historic feature of the decision was that for the first time, farmers were granted a deferral from the wage increase on account of severe drought. Incapacity to pay had been argued numerous times over the last twenty five years, for the most part unsuccessfully, before the Australian Industrial Relations Commission. The AFPC's decision granting the deferral was therefore a landmark in the history of industrial relations for the National Farmers' Federation.
Australian trade union reaction to the AFPC
Australian trade unions viewed the AFPC as a conservative business-friendly organisation that threatened the basic rights, pay and entitlements of Australian workers. Further, they argued that the AFPC benefited business at the expense of workers. Unions viewed the AIRC as independent and wished to retain it as the minimum wage setting body. ACTU's Greg Combet expressed his concern about Professor Harper's ability in an interview with Radio National's Mark Colvin.