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A rising tide is great if you own a boat

The Coalition works on the theory that “a rising tide lifts all boats”, which is all very well if you happen to own a boat.  The majority of the population is either bailing hard to stay afloat, treading water or drowning.

In the last five years, the world’s economies have made a strong recovery.  Investment has returned, GDP is growing, profits are up and jobs are being created.

The problem is that all this extra wealth is going to the people who already own boats.

In 2017, the top ten percent owned 50.3 per cent of all wealth in Australia.  The top one per cent’s share was 22.9 per cent while the bottom 60 per cent’s share was 15.3 per cent.

The 2017 OECD Economic Survey of Australia found “inclusiveness has been eroded” in the past two decades.

“Households in upper-income brackets have benefited disproportionally from Australia’s long period of economic growth,” the report said.  “Real incomes for the top quintile of households grew by more than 40% between 2004 and 2014, while those for the lowest quintile only grew by about 25%.”

Reserve Bank governor, Philip Lowe, said, “Wealth inequality has become more pronounced particularly in the last five or six years because there’s been big gains in asset prices.  So the people who own assets, which are usually wealthy people, have seen their wealth go up.”

Whilst more people are employed, job security has fallen with part-time work and contract work eroding workplace entitlements and confidence. Wages have stagnated (except for CEOs) and most of the jobs being created are for skilled professionals.  Positions as labourers or retail workers are falling.  Automation is eliminating many entry level and low skill jobs.

The fall in union membership coupled with government industrial relations regulations has left the workers at the mercy of the employers.  With private debt at dangerous levels, the owners of the capital have all the power.

The IMF’s Fiscal Monitor warns that, while some inequality is inevitable in a market-based economic system as a result of “differences in talent, effort, and luck”, excessive inequality could “erode social cohesion, lead to political polarisation, and ultimately lower economic growth”.

And that is exactly what we are seeing.

As the privileged crowd look down from the deck of their increasingly larger yachts, they ignore the pleas to throw out a life raft to those floundering in the water.  They jealously guard their extra life-jackets even though they have more than they could ever use.

The yachties don’t even have to dip their toe into the chilly waters of the employment pool to grow their wealth.  As they sip their champagne, their agents buy and sell shares and properties and collect rent and dividends while their accountants ensure they contribute as little as possible to the country by taking advantage of family trusts, excess franking credits, superannuation concessions, negative gearing, capital gains tax discounts, offshore tax havens, income sharing, car leasing, overseas “conferences” and a myriad of other legal ways to avoid handing over any of their stash.  Tax is for people who don’t have accountants.

The ACOSS report Poverty in Australia 2016 found there are three million people living in poverty in this country (ie living on less than 50% of median household income) including one in six children under the age of 15.  More than one in four older Australians live in poverty and, shamefully, people aged 65 years and over make up seven per cent of the homeless population.

High housing and utilities prices are a constant struggle for many Australians.

Yet our government fought to cut penalty rates and against any increase in the minimum wage.  They cut family payments and tightened up eligibility for aged and disability pensions.  Every budget has more draconian measures for Newstart recipients who are labelled by our boating crowd as lazy bludgers.  Concern for pensioners unable to pay their power bills did not stop the government axing the clean energy supplement they receive.  And the promised increases to the superannuation guarantee remain frozen/abandoned, at significant cost to the retirement savings of every Australian employee.

Labor have announced policies to rein in some of the overly generous tax concessions.  If they combine the revenue from those changes with blocking the company tax cut, they will be able to offer income tax cuts, preferably by raising the income free threshold rather than the second top bracket.

Sally McManus is working on ideas to increase wages.

Hopefully they will begin to address poverty by increasing welfare payments and making housing more affordable through changes to property tax concessions and construction of community housing to provide shelter for the homeless and low-cost rentals appropriate for different demographics.

There is no point in “growing the pie”, as Scott Morrison is fond of saying, if you keep giving a bigger slice to the fat kids.  Time they learned to share before the hungry masses become an angry mob.


21 comments

  1. Jamboree

    In my small town two sisters run a Christmas lunch at their expense, plus donations. One old man said he had spent 13 Christmases alone, until last year. Yet people said the lunch attracted drug addicts and the down and out. So what if some are? So much to learn from the participants. And, by the way, those who run it or volunteer are to my knowledge all atheists. The Churches apparently do not donate.This year they might?

  2. Clean livin

    Easy way to fix this. Replace ALL taxes with one very wide consumption tax on ALL transactions.
    Bread and milk attract 0.005%, Rolls Royce and luxury cruises attract 5000%.

    Result Makes money worthless until spent, then “Gotcha”

    Yes, it needs tidying up, but a good way forward.

  3. Kronomex

    The LNP have to find some way to recoup all the money that will be piped overseas if, and when, and if ever, the tax cuts get through parliament. What better way than to hammer the little people into destitution and ruin then hammer them some more to pay for the mistakes of a disgusting excuse of a party and gubmint. Who, when they are removed from power will swiftly develop selective amnesia or go on to cushy high end paid jobs in the business world.

  4. Paul

    Perhaps our PM and his toxic cabinet ministers should take note of the history of their favourite country the USA and reread Jefferson’s Declaration of independence …. We the people may not happily take much more of their lying, corruption, theft, deceit and chicanery. Will our armed forces shoot down the rioters on orders from our betters? I think they will… our police and military are very right wing gung ho.

  5. Andrew Smith

    Good article, though it’s hardly the coalition’s theory; it’s more about imported libertarian architecture engineered by the Koch’s on behalf of shy corporate donors and oligarchs (who hide behind foundations; nothing new).

    Politicians are now simply sock puppets being squeezed and manipulated themselves by similar and same in Australia, especially IPA, push polling and dog whistling or gaslighting supported by mainstream media with commensurate hollowing out and dumbing down of education and institutions with policy development helicoptered in from eg. ALEC.

    Not sure if it was much different in the past, conservatives seem to have a need to follow orders and respect authority (many on left too), but especially tricky for the normal centre right through left to access media, then gain and maintain power through grounded policy development.

  6. Matters Not

    The economy in a capitalist society can be doing very well but for the vast bulk of the population the benefits aren’t lived. Just viewed – and only from afar.

  7. Kaye Lee

    My daughter, who is a teacher, recounted a quote the other day…

    Teachers are about outcomes, not incomes.

    It made me think of our government. They proudly quote a quarterly growth figure neglecting to mention that they have bought most of that growth with military expenditure – big bucks that in no way flow through to any benefit for the community at large. They cling to the line that increased profits trickle down even with company profits at record highs and wage rises at record lows. They talk about the numbers of jobs created but not about the nature of those jobs.

    They tinker around floating lots of plans that amount to nothing. Ideas are one thing. Outcomes are another.

  8. Matters Not

    Re :

    Teachers are about outcomes, not incomes

    Indeed. Motivated by a missionary ideology that sees them fall far behind in the income stakes and over a long time. (Can’t strike – think of the children – who will care for them if we aren’t there?)

    But sometimes they wake up and really think of the children’s interests in the longer term. Look what’s happening in the US.

    The US is in the grip of a wave of strikes in our public schools. As a national organizer for the International Women’s Strike, which took place on 8 March let me also add: “at last”!

    The mainstream US media have been generally supportive of the strikes. They have highlighted how decades of neoliberal cuts to public education have kindled these flames. They have talked about how stagnant salaries mean teachers are unable to keep pace with the rising cost of healthcare. What they have not talked about is this: the strike action is led almost exclusively by women.

    At last! The dominance of women in the teaching (and nursing) profession led to industrial weakness, traceable to the mid nineteenth century when their missionary ideology was created and fostered.

    https://www.theguardian.com/commentisfree/2018/apr/10/women-teachers-strikes-america

  9. New England Cocky

    Uhm … Matters Not ….. the NSW teaching profession passed the point of women being over 50% of the teaching workforce in 1988, just about the time NSWTF President Jenny George conned teachers into accepting the Wages Accord. The wages fell as teaching became known in political circles as “women’s work” and wrongly described as “pin money for middle class families” by self-indulgent and self-serving “Senior Executive Service” shiny-bums, who fiddled the system to their own benefit with enormous unwarranted pay deals.

    Indeed, I remember one SES person Special Unit leader who was “demoted” to District Inspector with a PAY RISE of some $26,000 in 1988 …. thank you Greiner LNP misgovernment.

    Since then it has been all down-hill; teachers are facing the same indifferent departmental shiny-bums with exactly the same demands as the teachers fought for in 1988; school building maintenance, upgrading school facilities to 21st century standards, getting a fair wage that recognised the long hours too many teachers put in after school on marking and class administration.

    In my too long experience in education, too many female teachers took the departmental position “we have to look after the kids” thus providing a child minding service rather than an academic education, and always willing to take the wage increases that their striking colleagues won by losing pay for principle.

    You know there is something wrong with society’s values when a school teacher earns about $40 per hour after four or five years tertiary education, while the drop-outs of the education system are charged out as tradespersons or simply labourers or motor mechanics at $50 – $150 per hour.

  10. Chumley

    IPA is Australia’s equivalent of the NRA.

  11. Matters Not

    New England Cocky, there’s much in what you say but there are some claims I would quibble with. Yes there are SES levels in Education Departments but their pay and conditions are not of their own making. Rather SES pay and conditions are service wide. As you would be aware, within the SES, there is a great variation in pay levels with CEOs, DGs and the like receiving somewhat exorbitant rewards. Even so when compared with the private sector, they simply don’t rate.

    Ministers who are the public servants’ political masters like to see some (small number of) public servants well rewarded so that they have a comparative basis for their own remuneration. After all – it seems ridiculous that the boss is paid less than those who work for them. Hence I, as a Minister, should be given a pay increase.

    This missionary ideology – this motivation to rescue 19th children from the evils of their situation served two purposes. First, the already mentioned children. Second, it was designed to ensure that the teachers themselves, (coming as they did from the lower classes – and certainly not from the upper classes who would never let their offspring mix with children from such backgrounds) would remain separate (aloof) from the people they were trying to rescue.

    Teachers, even today, see themselves in somewhat religious terms. Motived by the good and right with the dollars of secondary consideration. Poor pay is often the result.

  12. Terry2

    John Howard was interviewed by Leigh sales on 5 April and when asked about the stagnation of real wages growth he echoed precisely what the IPA have been promoting for some time; he said when comparing when he was in office and the current situation :

    I think the big difference now is that wages are growing not at all and there has been a trade-off, that people don’t acknowledge very often, between lower unemployment and lower wages.

    The mantra of the IPA in recent years has been that Australian wages are too high and that makes us uncompetitive on the world stage. To bring down wages and salaries you need to maintain high levels of skilled inwards migration which in turn creates competition for jobs and relatively low unemployment rates (using the criteria of the ABS : a person is not unemployed if they worked for one hour or more during the reference period ) and low wage and salary growth.

    That’s why the suggestion of reducing immigration was met with such opposition by Turnbull and Morrison as to do so would create greater demand for labour and thus increases in wages and salaries which is not the plan that the IPA has for Australia.

  13. babyjewels10

    Spot on, Kronomex. That’s one thing they’re good at.

  14. helvityni

    MN, are you for real with your ‘Second, it was designed to ensure that the teachers themselves, (coming as they did from the lower classes – and certainly not from the upper classes who would never let their offspring mix with children from such backgrounds) would remain separate (aloof) from the people they were trying to rescue’.

    Lower and upper classes in Oz, no way; some just happen to to have more money…..

  15. Matters Not

    helvityni – LOL. ‘Truth’ is that the teachers of the masses had their historical roots in 19th Century England when fears that the masses would rise up in revolution and really upset the applecart. Generally speaking, the powers were concerned that teachers would be more influenced by Marx and not marks. Or something like that.

    The children had to be rescued from potential hell and damnation. Reading was taught because they could then read the Bible and know that the real rewards were to be found in the next world.

    It’s a bit like giving tax cuts to the rich today so that the lower classes will benefit in the morrow. But the ‘morrow never comes. But it will in the morrow. And so on.

    The sad part is that too many punters believe it.

  16. silkworm

    “… there has been a trade-off, that people don’t acknowledge very often, between lower unemployment and lower wages.”

    This is wrong. Progressive MMT argues that raising the minimum wage increases private spending the most efficiently, which boosts employment, especially in the retail industry.

    Women are overrepresented among the most poorly paid, so raising the mimimum wage should become a feminist issue.

  17. Wun Farlung

    New England Cocky
    You realise that ‘the dropouts of the Education system’ have done 4 year apprenticeships to earn $50/hour
    You are a snob

  18. Ben Aveling

    If you own 1 boat, a rising tide is neutral. Up, down or sideways, you still only own one boat. If you sell it, you need to replace it, so you’re no better or worse off. Only if you own more than 1 boat do you benefit from a rising tide.

  19. Matters Not

    Wun Farlung, Perhaps there’s an important (unrecognised) difference between education and schooling and perhaps the two concepts should not be equated – as they often are? Indeed it has been argued that there’s a critical need to Deschool Society and in so doing, establish a starting point for a de-institutionalized society.

    https://en.wikipedia.org/wiki/Deschooling_Society

  20. diannaart

    Helvityni

    Matters Not creates his own reality – this also includes mashing up his own version of history. Just ask Miriam English.

    Suffragettes and the Temperance movement did have common goals, particularity in creating a safe, fairer world for women and children. There were also many disagreements between the groups, particularity because the Temperance movement where mostly formed from religious groups and the suffragettes were more diverse. That this led to today’s treatment of teachers is just nonsense.

    Sort of like saying all women side with the likes of Miranda Devine and that Brechtensen woman and therefore low pay for women is the fault of women and nothing to do with the massive disparity between the “caring and nurturing” professions and more “manly” professions.

    Matters Not has chosen his moniker very well.

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