Households are getting a lower share of the nation’s income than ever before, despite total revenue increasing, reports Alan Austin.
YOUNG AUSTRALIANS now entering the workforce are the first generation since the Great Depression who cannot expect a higher standard of living than their parents.
Current data shows that Australia is coming last in the developed world on electric cars. Only 2% of vehicles purchased recently use clean technology. In Sweden it is 40%, in Iceland 55% and in Norway 83%. Priced from A$44,000 up, they are too expensive for most Australians. But not for Swedes, Icelanders and Norwegians.
Buying a house is, also, increasingly a privilege for the affluent.
Incomes shared unfairly
This is not because Australia is poor. It is rich and getting richer. It is because an ever-growing share of the nation’s income is being handed to wealthy individuals and the corporate sector.
The quarterly accounts from the Australian Bureau of Statistics (ABS) show the share of gross national income going to workers hit an all-time low of 49% in June last year. This has been below 51.5% for the last five quarters. The last time that happened was in 1964.
There is further confirmation from the ABS that Australians today are likely to remain poorer than the previous generation in the growth of household income. Data starting back in 1959, in the Menzies years, shows which periods generated the strongest growth in earnings for Australia’s households and which generated the weakest. The chart, below, shows the average percentage increase in annual household income, adjusted for inflation, with Labor periods in red and the Coalition in blue.
Collapse under the current Coalition
It is significant to observe that all prime ministers prior to Tony Abbott delivered substantial real growth – above 3% per year, mostly well above. It is also noteworthy that prior to the dismal Abbott period, the Coalition generally delivered higher growth rates than Labor.
This is partly explained by Hawke having to manage the recovery from the worst post-war recession up to that time, Keating copping the early 1990s global downturn, and the Rudd and Gillard governments battling the Global Financial Crisis (GFC). All Coalition prime ministers except Malcolm Fraser enjoyed buoyant global conditions – although none as favorable as the recovery period from 2014 to 2020.
Record growth in corporate profits
Company profits in Australia surged from 2017 onwards. Using 2008 as the base year, profits had risen by 19% by 2014. But they had soared by 69% in 2019 and by 92% in June this year.
This should have ensured bulging coffers of company taxes, mining royalties, luxury goods taxes and abundant wealth for all households. It didn’t.
Record export volumes and values
The recent Coalition years have been the best in Australia’s modern history – possibly in its entire history – for commodity prices and demand for exports.
Indexmundi reports coal is now fetching all-time high prices. Iron ore has commanded record prices for most of this year, but slipped back in September. Other commodities now at or near ten-year high prices include cotton, beef, maize, coffee, bananas, natural gas, propane, steel, gold and copper.
Total exports at record highs
The grey and green chart, below, shows the ABS export values from 2008 to 2021. This is instructive data in several respects.
Wasn’t trade supposed to save Australia from recession?
A frequent retort from anti-Labor commentators wishing to diminish Labor’s successful responses in 2009 to the GFC is to say that “Kevin Rudd didn’t save Australia. Trade with China did”. This has, of course, been long since debunked.
The graph above shows export values only increased by 22.8% from 2008, before the GFC, to 2013, Labor’s last year. In contrast, exports increased by a thumping 58% from 2013 to 2021. So if exports growth avert recessions, Australia should have sailed through the 2020 global downturn, as did Turkey, Chile, Bulgaria, Romania and other countries.
But it didn’t. Australia copped a severe recession and even now is yet to get employment back to pre-pandemic levels.
Where is Australia’s booming income going if not to households?
The evidence is compelling – and increasing as the economic data piles up – that the current Government’s principal economic program is to shunt vast amounts of Australia’s wealth to its rich party donors, many of them offshore. It achieves this through at least five mechanisms.
First, the Coalition actively suppresses workers’ wages at every opportunity. The Reserve Bank published this chart earlier this month showing the fluctuations in wages from 1998 to 2018 and the dramatic collapse since then.
Second, vast quantities of mineral resources are exported with abysmally small royalties claimed. Third, the Coalition refuses to collect hundreds of billions in taxes from highly profitable foreign corporations, as shown by the Australian Tax Office’s annual tax transparency reports.
Fourth, the Coalition has simply handed cash to many of its big donors. These include News Corp, the Cayman Islands company set up by Energy Minister Angus Taylor and the many organisations which rorted billions of JobKeeper funds.
Unacceptable governance
And finally, even more billions have been squandered through sheer foolishness and the inability to manage projects, such as the welched submarines contracts, first with Japan and then with France.
These things are not happening in countries like Sweden, Iceland and Norway.
Alan Austin’s defamation matter is nearly over. You can read the latest update here and support the crowd-funding here. Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.
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