Nearly 3 million workers to receive a 4.75% pay rise
Patrick Commins
Nearly 3 million workers will receive a 4.75% pay rise after the Fair Work Commission handed down its annual minimum wage decision.
Unions had demanded a higher 6% pay increase after last month’s budget projected inflation reaching 5% in the year to June. A peak employers’ association, the Australian Chamber of Commerce and Industry, was calling for a 3.5% increase.
The government estimates that fewer than 80,000 Australians are paid the current national minimum wage of $24.95 an hour, or $948 for a 38-hour working week.
But the change in the minimum wage affects about 2.8 million employees who have their pay set by an modern award.
Cost of living has been the No 1 issue weighing on Australian households since inflation tore through the economy in the wake of the Covid-19 lockdowns.
The previous minimum wage increase was 3.5% for 2025-26.
Inflation was 4.2% in the year to April, according to the latest Australian Bureau of Statistics figures, and the budget also predicted consumer price growth could push beyond 5% should the Middle East conflict extend further and oil prices climb higher for longer.
With the Reserve Bank warning it may have to hike interest rates further to squash any signs an inflationary mindset has taken hold of the country, Jim Chalmers, the treasurer, has called for a “real” wage increase, but added that it also needed to be “sustainable”.
Updated at 20.25 EDT
Key events
Melissa Davey
Older Australians waiting months for support at home
Senate estimates has heard there are 100,191 elderly people waiting for support at home funding that they have been approved for, but have not yet received.
People waiting for high priority support are waiting for an average of 1.3 months, those at a medium priority are waiting an average of almost eight months, and those waiting for a standard level of care are waiting more than 10 months, estimates heard.
Department of health and ageing staff said while high and medium priority wait times had decreased, standard support wait times had increased.
Wage rise ‘will be too much to bear’ for some small businesses says industry group
The reaction to the fair work decision is coming in thick and fast – it’s a decision that has significant political implications at a time when the economy and cost of living is firmly in the spotlight.
The Australian Chamber of Commerce and Industry’s David Alexander is in the Parliament’s mural hall – which as Patrick Commins noted earlier – is jam packed with advocates and pollies waiting to talk about the goings on of the day.
Alexander says that the FWC’s decision could lead to some businesses raising their prices, which would add to inflation, or be a tipping point for others.
double quotation markFor some small businesses, this will be too much to bear. So they’re being asked to wear an increase in their wage costs of 4.75%. So for some businesses, they will pass that on, and it’ll end up in inflation. For others, they’ll wear it themselves – it could be the tipping point for some businesses. Others will scale back their investment intentions. So this is not good news for the business community.
‘A really good outcome’: ACTU welcomes minimum wage decision
The Australian council of trade unions secretary, Sally McManus, has welcomed the fair work commission’s decision to increase the minimum and award wages by 4.75% at a press conference in Sydney.
She says the decision to award a 6% increase to 100,000 of the lowest-paid Australians. The ACTU had been pushing for a 6% wage rise for all minimum-wage workers.
McManus says:
double quotation markThis is a really good outcome for everyone struggling with cost of living, in particular of course lowest-paid Aussies are the ones that are struggling the most with cost of living and they need this pay rise, absolutely.
She says the “only spanner in the works” is the US president, Donald Trump, and the conflict in the Middle East which could continue to fuel domestic inflation.
double quotation markHopefully, if the war ends, this will mean that throughout the whole calendar year that people will keep ahead of the cost of living.
Sally McManus in 2023. Photograph: Dean Lewins/AAPShare
Updated at 21.32 EDT
Patrick Commins
Greens senator slams minimum wage decision
Greens senator Barbara Pocock has slammed this morning’s 4.75% minimum wage increase, saying the Fair Work Commission had “decided to erode the wages of some of the lowest paid workers”.
“The Fair Work Commission’s decision today amounts to a real wage cut for millions of Australians,” she said in a statement.
double quotation markEven with this 4.75% increase in the minimum wage, low-paid workers still face an uphill battle as wages have failed to keep up with inflation.
Since Labor came into power, real wages have decreased by 1% while rents have increased by more than 22%. How on earth can renters keep a roof over their head?
Pocock did not mention the higher 6% for the roughly 100,000 lowest paid employees.
Business groups and unions are due to front the press pack this morning, but there’s a bit of a traffic jam in Parliament house’s mural hall – a favourite spot for media conferences.
The Coalition says it “supports the independent process to determine the minimum wage increase of 4.75%”, but shadow minister for employment, Jane Hume, added:
double quotation markThere is little comfort in a wage increase if Labor’s inflation simply eats it away.
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Dan Jervis-Bardy
Coalition to vote against Labor’s tax changes
Angus Taylor’s opposition has confirmed it will oppose Labor’s changes to negative gearing and the capital gains tax ahead of debate in the lower house on Tuesday.
The Coalition resolved its position at a party room meeting this morning, which was hardly surprising given the opposition has vowed to repeal what it describes as “toxic taxes” if he wins the next election.
Labor has included its $250 “working Australians tax offset” in the same legislation, which is a measure the Coalition supports but will be forced to vote against given its opposition to the wider package.
Guardian Australian understands the opposition will seek to amend the bill to instead include its proposal to index the tax brackets to inflation.
That attempt will fail given Labor’s numbers in the lower house but the Coalition will push ahead regardless, hoping to create the impression that the government is opposed to combating bracket creep.
ShareMelissa Davey
Health department defends internal testing of aged care algorithm
Independent Senator David Pocock had grilled Department of Health and Aged Care officials in Senate estimates about creating an algorithm used to assess the home care needs of older Australians in-house, and testing it internally without consulting any aged care advocates or experts about the final version of the algorithm.
The department confirmed it validated the algorithm in-house.
Department officials said while the final algorithm was not consulted on, it had undergone many reiterations and assessments before being finalised.
“We have tended to move away from kind of end-point evaluation of the final product to think about what are all the steps on the way through that have led to give confidence that something leads to the right outcome,” Pocock was told.
David Pocock in Senate estimates last week. Photograph: Lukas Coch/AAP
Greg Pugh said the department ran the algorithm through a process of refinement on more than 200,000 completed assessments over 2024 and 2025 … “all of that work ensured that those algorithms would be achieving those reliable outcomes when support at home commenced,” he said.
Pocock said the current algorithm in its final, current form should also have been clinically assessed.
He gave the example of an experienced geriatrician who contacted him about a patient with significant visual impairment who was assessed by the algorithm as needing a level two support package, “but any experienced clinician could see that the man needed a level four”.
Because of inadequate support, the man’s daughter has now moved in with him, Pocock said, “and while he waits for reassessment, she’s using up her long-service leave because he’s obviously now at significant risk of injury”.
Pugh said it was not appropriate to “readily dismiss all of the professional clinical work” that went into designing the assessment and algorithm before the final version was implemented.
Updated at 21.19 EDT
Tom McIlroy
Former Labor minister launches public Aukus inquiry
The former Labor minister Peter Garrett has launched the public inquiry into the Aukus nuclear submarine agreement, alongside independent MPs David Pocock and Andrew Wilkie.
Garrett says he sees no evidence that the US military industrial base has sufficient output to build submarines for Australia – putting at risk the costly deal with Australia and the UK.
Garrett will have four fellow commissioners for the five-month inquiry: former chief of defence Chris Barrie, former Western Australian premier and Keating government minister Carmen Lawrence, as well as the Australia Institute’s co-CEO Leanne Minshull and Karina Lester, a Yankunytjatjara community leader.
The inquiry is due to report by the end of October.
Updated at 21.14 EDT
Patrick Commins
Fair Work Commission president ‘regrets’ no real pay increase for award workers
The Fair Work Commission’s president, Justice Adam Hatcher, described it as “regrettable” that this morning’s minimum wage decision for a 4.75% increase could not deliver a real pay rise for the millions of workers on award wages.
Hatcher said “a fundamental consideration” was that most employees on modern awards “are still in the position that their wage rates in real terms remain lower than what they were in July 2021 prior to the post pandemic spike in inflation”.
double quotation markThe real wage gap … has particularly affected the living standards of the low paid and their capacity to meet their needs.
This was the background to the higher 6% increase in the pay rates of roughly 100,000 employees on the very lowest wages.
The RBA forecasts inflation will hit 4.8% by June, and Hatcher said “it would now take a wage increase of well over 5% to close the real wage gap”.
double quotation markWe have concluded, regrettably, that it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase for employees reliant on modern award wage rates that would be sufficient to close the real wage gap entirely,” he said.
However, we consider that we should at least ensure that modern award-related employees generally are not worse off in real terms than they were as at one July 2025, and that we should also take additional measures to protect the position of the very lowest paid workers under modern awards.
Solomon Islands prime minister attends welcome to country in Canberra
The Solomon Islands prime minister, Matthew Wale, is in Canberra this morning ahead of high-level meetings and has attended a welcome to country ceremony.
Wale replaced the former PM Jeremiah Manele, who was ousted from power in a no-confidence vote earlier this month. Wale has long advocated a more cautious approach on ties with Beijing and is expected to push for a closer security relationship with Australia and the United States in office.
He will attend talks with the prime minister, Anthony Albanese, on Wednesday.
Solomon Islands prime minister Matthew Wale (R) attends a Welcome to Country ceremony in Canberra. Photograph: Hilary Wardhaugh/AFP/Getty Images Photograph: Hilary Wardhaugh/AFP/Getty ImagesShare
Updated at 21.13 EDT
Melissa Davey
No consultation before aged care algorithm was implemented
Greg Pugh, from the Department of Health and Aged care, confirmed in Senate estimates that no aged care provider, advocacy group or expert was consulted when the government made the decision to remove the ability for aged care assessors to override the outcomes of an aged care assessment tool.
The Integrated Assessment Tool (IAT) involves an assessor asking an older person questions about their physical, social and personal circumstances. An algorithm then determines the level of support and funding for home support that person is entitled to.
The department’s user manual states that assessors must accept the IAT’s classification outcome when assigning home support, with assessors telling Guardian Australia their role had effectively been reduced to data entry.
Aged care assessors said people are being under-assessed by the algorithm and are not getting the level of support needed, and that they have no ability to override the algorithm when it makes a wrong assessment. This is leaving people with inadequate care, they said.
Asked by Greens Senator Penny Allman-Payne whether the department consulted anyone on removing human override from the algorithm, Pugh said:
double quotation markIn terms of if we ever consulted one individual provider or older person about the removal of the override, I believe the answer that is no.
Liberal Senator Anne Ruston asked whether the algorithm in its current form was trialled by the department. Department staff confirmed it was not tested, but that the algorithm evolved on the basis of being trialed and tested internally in earlier versions.
Updated at 21.00 EDT