Finance Minister Mathias Cormann says an oversupply of workers is behind sluggish wage growth, arguing creating more jobs will boost employees' case to fight for pay rises.
Senator Cormann said during the Howard government there was strong economic growth and low unemployment, increasing workers' bargaining power.
"As more Australians are hired across the economy and competition for workers increases, the bargaining power of workers increases," the minister said.
Senator Cormann said the government's proposed company tax cuts would attract more investment and create jobs.
Wage growth is close to a two-decade low of 2.1 per cent.
"The reason wages are not growing more strongly now is because there is still some excess supply in labour market," Senator Cormann told Sky News.
The government continues to lobby the Senate to pass business tax cuts, with part of the package still short of the required cross bench support in the upper house.
"Wages could be higher if the Labor Party got out of the way and backed in our business tax cuts in full," Senator Cormann said.
He said the government had no plans to use go to an early election to resolve a Senate impasse on tax cuts.
"We're planning to go full term," he said.
A half-Senate and full House of Representatives election is due by May 2019.
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