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Aust has an 'earnings problem': treasurer

AAP logoAAP 16/09/2016

Treasurer Scott Morrison says despite 3.3 per cent economic growth, Australians aren't feeling better off because income growth is weak.

Mr Morrison told the Australia-Israel Chamber of Commerce in Melbourne on Friday there was an "earnings problem".

"We want to see this change - we want Australians to earn more so they are in a stronger position to improve their living standards," Mr Morrison said.

Wage growth has more than halved over the past 10 years from over 4 per cent to around 2 per cent, the treasurer noted.

"Despite our growth we are not feeling better off because growth in incomes has been weak."

But asked subsequently if that meant the coalition would support a bigger rise in the minimum wage, or weekend penalty rates, Mr Morrison made it clear that wasn't what he meant.

"I don't think you're understanding the point I was making," he told reporters, adding that before the global financial crisis income growth was strong, and people had gotten used to that, but after the GFC those "bonuses" weren't paid.

"With a lower rate of income growth - despite the fact that inflation has been low and interest rates have been low along with other cost pressures - the feeling one has is that they're not in as strong a position as they were previously.

"That's what we've got to address."

Mr Morrison also used Friday's speech to announce the government had begun negotiations with Israel on a tax treaty to improve trade and investment by removing tax barriers for business.

The coalition hopes to conclude the deal in the first half of 2017.

Mr Morrison announced a Productivity Commission inquiry into Australia's productivity performance which would be repeated every five years to complement the Intergenerational Report.

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