I thought this theory was long since discredited. I'm always surprised that every few years it pops up again under a different name. In general, it makes some sense (as much as any economic theory). However, in practice, economic systems aren't that simple, cause and effect are tangled, diluted and just plain non linear....
As far as I understand, in Australia, profits have been rising and wages have been stagnant. The company tax cuts are supposed to fix that? Well, it has already been shown that cutting tax doesn't lead to increased wages.
If I was in charge (I'm not, so this only guessing)
- Increased dividends for shareholders. The increasing the value of shares?
- Infrastructure or large investment.
- Increase in wages? More likely I would want more workers at the same wage...
To be honest, if you have been undervaluing your workers up to this point, I really don't think increasing their wage now will change their view of your company!