Prime Minister Scott Morrison has refused to back an increase to minimum wages above the rate of inflation, despite cost of living cementing as a pivotal election issue.

Campaigning in western Sydney on Thursday, Mr Morrison said it was the up to the Fair Work Commission to set the national minimum wage, and he had no “special magical powers” to push for a pay rise.

“We have always believed the Fair Work Commission should make the decision independently of government, based on the evidence. That is why they were appointed for that purpose,” he said.

“I don’t believe I have a magic pen that makes wages go up or prices go down. [Opposition Leader] Anthony Albanese is walking around in this election pretending that he has some special magical powers to make wages go up and costs go down, and you don’t. As a prime minister, you don’t have that.”

The commission is in the process of its annual review of the minimum wage wage. It is set at $20.33, and directly affects the pay of thousands of low-paid workers as well as flowing on to millions more.

In its submission to the review, the federal government said the decision “should support the economy and labour market, balancing improving living standards for Australians with ensuring the viability of employing businesses”.

The Coalition’s stance comes amid this week’s first rise in official interest rates in more than a decade, taking the cash rate from 0.1 per cent to 0.35 per cent.

The rate hike – which followed last week’s figures showing inflation at a two-decade high of 5.1 per cent – has put cost of living pressures at the centre of the election campaign, with both leaders claiming they would be better at managing the financial squeeze being felt by Australian households.

Labor has accused the Coalition of doing too little to aid Australians struggling with a “triple whammy” of surging prices, rising interest rates and falling real wages. The Coalition maintains inflationary pressures are global, and its policies are supporting a surging job market – which, in turn, will lead to rising wages.

“What we saw from the governor of the Reserve Bank this week, he has finally said, because that is what he has been looking for, that he is seeing wages start to increase,” Mr Morrison said.

“The reason wages are increasing is because unemployment is coming down and the Reserve Bank governor says he believes that unemployment in Australia will fall to below 50-year lows of 3.5 per cent. That is an extraordinary arrangement.”

Key national wages data will be released on May 18.

Anthony Albanese was talking up the jobs opportunities of Labor’s climate plan. Photo: AAP

Mr Morrison made his fifth visit of the election campaign to the Labor-held seat of Parramatta on Thursday to make a pitch to small business.

Future small business owners were good economic conditions to set up shop, as Mr Morrison continued to play up the government’s fiscal credentials.

He promised the creation of 400,000 new small businesses in the next five years if the Coalition wins the May 21 election.

“If we can keep driving down, wherever we can, the cost for small businesses to do business, that means we can put pressure down on rising costs of living,” he said.

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ABS data shows 365,480 new businesses were created in 2020 and 2021, indicating Mr Morrison’s target would require a less than 10 per cent lift in numbers.

Additionally, while 128,000 new businesses started up in last year’s December quarter, 116,000 closed up shop.

Labor said Mr Morrison’s small business pledge was less ambitious than he tried to make it sound.

The opposition instead leaned on its powering Australia plan, saying more than 600,000 new jobs would be created by 2030 – five out of six of them in regional Australia.

“Climate change represents a jobs and economic growth opportunity for Australia,” Mr Albanese, who was also in Sydney on Thursday, said.

“Only Labor can end the climate wars and what we need is to do just that so businesses can have the certainty to invest confidently going forward.”

Mr Albanese also made his election pitch to industry leaders on Thursday in a speech to the Australian Chamber of Commerce and Industry, stressing the need for economic reform.

“A country cannot keep drawing from an old well, because the well eventually dries out,” he said.

“Australia needs a new playbook to seize the future.”

Among the measures Mr Albanese proposes is universal childcare, which he says will support workforce participation.

-with AAP