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.
