Politics Analysis

Living standards tumbling in Australia despite booming national wealth

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Cartoon by Mark David/@markdavidcartoons

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.

Profit wage share 70-21 E.jpg

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.

Household income by PM Nov 2021 Final.jpg

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.