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Anthony Albanese Supports 5.1% Wage Rise, Causes Major Political Debate

Labor's industrial relations spokesman Tony Burke has denied leader Anthony Albanese's support of a wage increase in line with inflation was a captain's call. 

While the opposition has recently resisted putting a number on wages growth, Mr Burke said Labor had always maintained wages could not continue to go backwards.

Mr Albanese effectively put a figure on Labor's position on Tuesday, indicating he supported a wage increase of 5.1 per cent, in line with the highest inflation spike in two decades.

Anything below inflation would be a pay cut, Mr Burke told the ABC as he defended Labor's position.

"You've heard all of us on many occasions for a long time now say people can't keep going backwards," he said on Wednesday.

"The minimum wage in Australia is $20.33 an hour. These are the people who are the heroes of the pandemic, who have kept the economy running during a time where a whole lot of us on higher incomes were able to work from laptops."

Liberal campaign spokeswoman and social services minister Anne Ruston attacked Mr Albanese, saying the Fair Work Commission was independent of government.

"What we saw yesterday was somebody who clearly in great desperation because he wants to be the prime minister of this country, has made a statement that has got absolutely no science behind it," she told Sky News.

"Did Mr Albanese have solid advice as to why he would suggest that that was the appropriate number for wages to be increased by?"

A rapid spike in wages growth could stunt the economy by pushing up interest rates and inflation, Superannuation Minister Jane Hume argued. The Fair Work Commission should be entrusted to oversee increases in the minimum wage, Senator Hume said.

"We want to make sure the economy is sustained at a steady growth rate. Too high wage rises would disrupt that," Senator Hume told the ABC on Wednesday.

The Victorian senator maintains the best way to increase wages is to put downward pressure on the unemployment rate, leading to businesses offering more to retain and attract workers.

"When there is low unemployment, employers think differently," she said. "Around a million people just in the last couple of months of last year, changed jobs and they changed jobs for a pay increase of somewhere between eight and 10 per cent. That only happens when unemployment is exceptionally low."

Australian Industry Group chief executive Innes Willox said wage growth over five per cent - or an increase to the minimum wage of $42 a week - was unsustainable.

"There are hundreds of thousands of small businesses and for many of them, this would be a backbreaker, it's not sustainable for them to be asked to pay this," he told Sydney radio 2GB.

Mr Albanese rejected arguments a wage rise in line with inflation would result in interest rate hikes.

"That's nonsense," he told Sydney radio station 2Day FM.

"If you have - as any economist knows, and the Reserve Bank knows - wage increases that are no more than inflation plus productivity, then that isn't inflationary."

On Tuesday, Mr Albanese said having stagnant wages alongside rising living costs was "untenable".