Barry Leddicoat

Audit chief defends plan to slash minimum wage

THE chairman of the Abbott Government's Commission of Audit has defended its proposal to slash the minimum wage for up to 10 years in a Senate committee hearing in Canberra.

In its report handed down on Thursday, the commission proposed cutting the minimum wage by more than $100 dollars and then setting it to increase at levels below inflation for a decade.

The proposal, if the government decides to act on it, would then set the wage at 44% of average weekly earnings and hand the power to set it to the states.

It would see the minimum wage fall from just over $620 a week now to about $480 a week, increasing at one percentage point less than the consumer price index for 10 years.

Commission chairman Tony Shepherd, a former head of the Business Council of Australia, on Friday defended the recommendation during a Senate hearing.

Asked whether he thought the minimum wage was too high, Mr Shepherd said he did, but explained Australia's minimum wage was the second highest of all developed nations in the world.

He said it was a good thing to have a "high" minimum wage "if there's full employment", but he believed it was currently impacting on youth unemployment.

Mr Shepherd said the proposal would see the nation's lowest wage "re-indexed", and while it would not have an "immediate impact", it would have impacts over time.

"All we've suggested is rebalancing the escalation of the minimum wage over an extended period," he said.

Mr Shepherd said while you could pick any one of the government programs the commission recommended cutting and "say that's not fair", he did not specify that the wage was not a cost met by government.

Rather, the audit report made the recommendations to cut the wage due to "the relationship between the rate of income support and the minimum wage".

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