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How about we reduce cost of living pressure by increasing wages

The majority of Australians cite cost of living as one of the priorities that they want the government to address.

In typical one-dimensional ideological thinking, the Coalition’s only answer to this is to appoint a minister for getting power prices down who will take a big stick to the power companies.

The main reason that cost of living is an issue is because wages have stagnated for so long as housing, power, transport and other costs have risen.

Rather than recognising the danger of stalled wage growth, the Coalition have set about deligitimising the collective voice of unions, cutting penalty rates to our lowest paid workers, fighting increases to the minimum wage, and freezing the planned growth of the superannuation guarantee.

Rather than showing concern for the homeless and those who struggle to pay rent or buy their first home, the government is fighting tooth and nail to protect the tax concessions of those who own two or more homes.

Lifting the freeze on government fuel excise has added to the cost of petrol at a time when Iranian sanctions, Saudi tightness because of a war in Yemen, Venezuelan production going through the floor and disruptions in Libya have seen oil prices increase.

According to Professor John Buchanan from the University of Sydney’s Business School, the gap between wages and the cost of living is growing in many developed countries, despite rising productivity.

“Australian workers are more productive now than they’ve ever been, but they have not shared in the gains in the way that they used to,” he said.

This has obvious implications. When people have less disposable income, either demand dries up or private debt grows, neither of which are good for the economy.

While many other developed countries have seen a decline or “levelling out” of personal debt since the 2008 global financial crisis, Australia’s debt levels have continued to increase. The ratio of household debt to income has more than doubled between 1995 and 2015, going from 104% to 212%, according to the OECD Data released in 2015.

Poverty in Australia 2018 found that there are just over 3 million people (13.2%) living below the poverty line of 50% of median income – including 739,000 children (17.3%). In dollar figures, this poverty line works out to $433 a week for a single adult living alone; or $909 a week for a couple with 2 children. Many of those affected are living in deep poverty – on average, this is a staggering $135 per week below the poverty line.

The group of people experiencing poverty the most are, unsurprisingly, those relying on Government allowance payments such as Youth Allowance and Newstart. Yet the government’s reaction is to try to claw back welfare overpayments using a flawed system, and to steadfastly refuse to increase Newstart payments. They have tried various attempts to make it harder to even get any payment and introduced penalties for non-compliance.

Instead of positive action, we get trite phrases like if you have a go, you’ll get a go, or the best welfare is a job. They ignore the advice from the Business Council of Australia that the low payment is an impediment to actually getting a job.

Instead of increasing the tax free threshold to give low income earners some relief, as Julia Gillard did to offset cost of living pressures from introducing carbon pricing, the government wants to lower taxes for big business even though they are already making record profits and investors are lining up.

Any pretence that this government cares about cost of living completely evaporates on even a cursory examination of their performance since coming into office.

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12 comments

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  1. Shaun Newman

    This evil L’NP government does not want to see wage increases, they are mostly independently wealthy people who run for the L’NP and they “hate” working class people with a passion, remember all we are to them is an increase in the costs of running their businesses.

  2. Marcus Champ

    Agree with all of that BUT lets also recognise why the cost of living is rising to such an extent. In simple terms rent-seekers are increasingly using the public as their very own ATM and are gradually squeezing us dry, often not just enabled by Government but encouraged by Government under the banner of “balancing the budget” which we all should know by now is a LIE. The Government is the ISSUER of the currency and as such does not need revenue in order to spend let alone “balance the books” like a household, but I digress and will get back to the main point…

    What do I mean by rent-seekers using the public as an ATM? Lets start with some obvious ones…toll roads are utterly unnecessary (as noted above), thus are a tithe on movement right out of the middle ages, and essentially act to siphon our wealth to monopoly corporations for their profit. How about the massive fees people now pay for education…why? Because Government provided education has been sold off to Corporations in the name of “efficiency” and are now using that power to extract ever increasing profit. Then there is the rip-off of Health Insurance, and stamp duty on housing transaction (a more inefficient, regressive tax is hard to find), and childcare.

    But why stop there…from the electricity we consume (rent-seekers extracting profit there in a massive ongoing rort), to going to the airport (monopoly corporations extracting massive fees), to your Bank account (do you really think Bank transactions are that expensive)…to your superannuation (Australian fees are amongst highest in OECD), to the groceries you buy (its certainly not the local small business farmers who are benefiting from those arrangements).

    In almost every transaction you do on a daily basis our economy is being stripped of wealth at every opportunity for the benefit of someone else…likely a foreign owned corporation. So absolutely demand that wages are fair and actually reflect the value add of labour, but lets also demand the unnecessary costs that we are burdened with every day are also stripped out from the system. I for one am sick of being treated as a cash-cow and its time the rip-off ended.

    Marcus

  3. Susan

    My sentiments exactly 👏🏼👏🏼

  4. pierre wilkinson

    Hopefully an incoming Labor government will immediately increase the welfare payments, which will in turn boost the economy….
    but meanwhile where is the clamour about fiscal responsibility when this mob claims competence despite doubling the national debt?

  5. Tim Jefferson

    Spot on Marcus, Many ignorant Australians think that the Australian economy is like a household budget, aided and abetted by ignorant politicians, ignorant media, and other ignorant Australians.

  6. Matters Not

    Tim Jefferson re:

    Many ignorant Australians think that the Australian economy is like a household budget, aided and abetted by ignorant politicians, ignorant media, and other ignorant Australians

    It seems you think are many, many ignorant Australians, so have you an estimate re the percentage who have thrown of that cloak? You know, those who are no longer ignorant when it comes the one true way re budget matters? Does it include any politicians? Or is it just a conspiracy of ignorance?

  7. Jamesss

    Remember that great line ? “I’m on your side” what a f**kwit !

  8. MikeW

    This government has been talking about lowering power prices for nearly six years so that the women of Australia could do more ironing, good on you Tony, and all they have done is increase, so much for the big stick. My wife and I are retired and fortunate to own our home, but it still isn’t easy on a pension, there are still astronomical power bills to pay, water and council rates, insurances home and contents, car insurance maintenance and petrol, house repairs and maintenance, groceries and entertainment (hah).
    If we didn’t have a modest amount of super (thanks labor) to draw down on we would have had to sell our home and would be living in a one bedroom flat.
    How people renting while on the pension and unemployment benefits manage beggars belief.

  9. Frank Smith

    Inequality!! The November issue of “Scientific American” contains an excellent series of articles around the theme “The Science of Inequality”. It is headed by a paper “A Rigged Economy” by Columbia University Nobel Prize winning economist Joseph Stiglitz that enlarges on many of the points that you have made Kaye Lee. Other articles explore “The Health-Wealth Gap”, “Automating Bias” and “The Environmental Cost of Inequality”. For those who are able to access Scientific American I recommend this November issue – it provides scientific evidence based facts on the scourge of inequality in our society.

    https://www.scientificamerican.com/report/the-science-of-inequality1/

  10. Andreas Bimba

    The Liberal or Conservative voter probably see themselves as being superior to the average and many have strived to own their own home in a more affluent suburb, acquire an investment property or two, put the kids through the best private schools they can afford, win a spot for them at the best tertiary institutions, build up a network of employment contacts, build a substantial superannuation nest egg and own a fleet of luxury SUV’s.

    They want a two tier society of material affluence for a rentier class being served and subsidised by a renting class made up of most of the population. A desperate underclass willing to serve in any capacity for a pittance adds to their self satisfied feeling of superiority. Other countries such as the US and China have gone even further down this path.

    Austalia’s relatively egalitarian past has been trashed over the last 40 years of the neoliberal era. Free higher education has been taken away and much of the population will be poorer than their parents due to precarious employment and expensive housing and other necessities. Most of the Australian population is now being denied the opportunity to develop their full potential. Neoliberalism is a destructive cancer.

    The real gains however have been made by the top 1% and they have just let the average Conservative voter catch a few crumbs off the table in exchange for entrenching the corporate oligarchy especially by the mining, finance, gambling and property speculation sectors, for unwinding the social welfare system and for weakening the union movement and working conditions. The mainstream mass media, the business associations, lobbyists, the neoliberal think tanks, academics, bureaucrats and politicians succeeded in delivering this political and economic coup d’etat.

    Kaye’s article and Marcus’s comments accurately describe our predicament.

  11. Kaye Lee

    I hate to keep quoting Craig Kelly’s facebook page but it gives a valuable insight into the far right. This was an exchange I had with a commenter:

    KA: Labor wants poverty. They hate successful people

    KL: The Coalition have given us poverty – there are just over 3 million people (13.2%) living below the poverty line of 50% of median income – including 739,000 children (17.3%). Ruling for the rich is bringing the country to its knees. Rather than showing concern for the homeless and those who struggle to pay rent or buy their first home, the government is fighting tooth and nail to protect the tax concessions of those who own two or more homes. Wages have flatlined while company profits have soared.

    KA: Kaye Lee do you think governement has to do everything for you. Better if you buy shares and be self reliant. Only government to blame are Labor government who create lazy dumb people with lots of handouts. Labor hates success

    KL: The handouts to the rich far outweigh those to the poor. Forty-eight of Australia’s highest earners, earning an average of $2.46 million each, paid no income tax in 2014-15, not even the Medicare levy. All were able to drive their taxable incomes down below the $18,200 tax-free threshold. Thirty-four reported taxable incomes of zero, while 12 reported combined losses of $13.9 million.

    Extraordinarily, the biggest deduction claimed by 19 of the 48 was “cost of managing tax affairs”, averaging about $1.07 million each. This is what happens when you offer overly generous tax concessions to greedy people. “We don’t pay taxes; only the little people pay taxes,”

  12. ChristopherJ

    Thank you, Kaye. I think wages, lagging prices of course, have probably gone far enough. We are a high cost country for tourists, or to sell anything competitively to other countries.

    I’ve almost lost a ‘friend’ defending dole bludgers. That same man is working class like me, yet we argue, him keeping his eyes focused on the obscene cost of keeping the bludgers alive –

    ie as if the miserly welfare our government provides is dependent on the taxes it can raise from us, ffs

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