The assault on workers in Australia

Australian workers have been hit with the biggest drop in living standards in half a century. Since the end of 2021, real household disposable income has fallen from $62,000 a year on average to $56,000, according to Australian Bureau of Statistics data. And little is being done to alleviate the hardship.

In the 2010s, living standards didn’t increase much. But they jumped during the pandemic because of increased financial support from governments and the inability of households to spend much under the lockdowns. However they’ve been rapidly falling in recent years, for several reasons.

First is rising consumer prices. Over the past three years, prices have risen by more than 16 percent, according to the latest quarterly consumer price index figures from the Bureau of Statistics. Non-discretionary items (things you generally must pay for, such as food, electricity and rent) have gone up by nearly 20 percent. While headline inflation has dropped in recent months, things aren’t getting cheaper – prices are just rising at a slower pace than they were twelve months ago.

With rising food prices, more people are relying on charity to get by. One-third of households experienced moderate or severe food insecurity in 2023, meaning they compromised on their meal choices or skipped whole meals or days of eating, according to the latest Foodbank Hunger Report. Three-quarters of those experiencing food insecurity did so for the first time that year.

Inflated prices have been blamed on supply chain disruptions, Russia’s invasion of Ukraine and catastrophic weather events. But another major factor has been the opportunistic profiteering of business owners. An Australia Institute report found that in 2022, Australian companies increased prices by $160 billion above their increased costs for wages, taxes and other inputs. That’s an extra $160 billion taken from consumers and pocketed as profits. The banks, supermarkets, energy companies and airlines are all in on it, recording record profits and payouts to shareholders. For instance, Woolworths’ net profit increased by 4.6 percent to $1.2 billion in the last financial year; the big four banks have recorded higher profits in the last couple of years than their 15-year average; and Origin Energy announced an 84 percent surge in annual profit in August last year (while energy prices were basically doubling).

Second is the housing crisis. Twenty-five years ago, the average house was worth nine times the average disposable household income; now it’s sixteen and a half times, according to data from the Bureau of Statistics. Prices have risen astonishingly in some cities: 57 percent in Adelaide since the end of 2019, 51 percent in Brisbane and 38 percent in Sydney. Sydney’s median house price is now $1.6 million.

So a lot of people are taking on a lot more debt, which has become more expensive to service. The average new mortgage nationally is about $620,000. Increasingly, young people can’t buy into the market without help – parental assistance for new home purchases is up from 12 percent in 2010 to 75 percent today.

Repayments on expiring fixed rate mortgages taken out before interest rates started rising in 2022 have increased by an average of 64 percent. Average monthly mortgage repayments now range from $2,855 in the Northern Territory to $5,118 in New South Wales, according to calculations by Forbes Advisor Australia. To take a whole set of averages, a single person with an average mortgage on the average income would need to spend 3.6 weeks of every month’s wage on mortgage repayments – this is clearly impossible.

What do you do if you can’t buy a house? You rent, of course. But there’s serious trouble there as well. On average, rents have gone up by about one-third since mid-2020, and this trend is accelerating. In the first three months of this year, capital city rents rose faster than any other three-month period for the last 17 years, according to a report from property website Domain. And forking out a significant chunk of your income to a landlord is now a perverse privilege; rental vacancies are at a record low of 1 percent.

Again, this is a crime with a culprit. Decades of Labor and Liberal housing policy have encouraged speculative investment in housing. Extensive tax concessions have helped a small minority purchase an increasing share of dwellings, while public housing stock has been annihilated, forcing an upward trend in prices for the rest of the housing market.

Third, wages have not kept up with inflation. Rising prices wouldn’t be such an issue if wages were keeping pace. But since March 2021, wages have risen on average by 9 percent, while inflation rose 14.6 percent. The last three years have wiped out more than a decade of wage growth. As house prices jumped 30–50 percent over the last five years, wages rose only 12 percent.

Real wages (wages adjusted for inflation) started to rise a little last year: the wage price index rose 4.2 percent while inflation rose 4.05 percent. But there are caveats to this. Wages have not risen more than inflation on non-discretionary items (which is basically all that lower-income households are currently buying), and they have not risen for all workers.

Consequently, household savings are rapidly being depleted. Many households built savings buffers during the lockdowns, which helped to soften the financial blow of the last few years. But a report by comparison website Finder estimates that almost half of all households have less than $1,000 saved, and one in five have nothing at all. Only the top 20 percent of households have maintained their savings – these are people who earn so much that they are relatively unscathed by the cost-of-living pressures.

The one small solace of the last few years has been that unemployment has not risen sharply. When interest rates started to rise in 2022, many economists assumed that this would force a recession and push up unemployment. This hasn’t eventuated – for now at least. Nevertheless, unemployment is slightly ticking up from 3.5 percent in March 2023 to 3.8 percent this March, and is rising faster for young people (youth unemployment is often a bellwether for broader unemployment trends). Also, many people with a job do not get paid enough to make ends meet – more than a half of those suffering from food insecurity have at least one family member in paid work.

The only options available to people to deal with these financial pressures are to reduce their standard of living by reducing consumption, work more or take on debt.

According to the Bureau of Statistics, household spending plateaued late last year, rising only 0.1 percent, while spending on discretionary items fell by 0.9 percent compared to the same period the previous year. In the December quarter, businesses ran down the amount of stock they had on shelves and in storage: why stock items no-one can buy?

The number of people working more than one job has increased to a record high of almost 1 million, and credit card debt (which has an average interest rate of 18 percent) is up 17 percent since September 2021, according to Reserve Bank figures.

That’s the statistical round up of where things are at, but to simplify the picture: over the last few years prices have gone up, real wages have gone down and people are taking on larger amounts of debt. Life is getting a lot tougher for millions of people.

Meanwhile, the total wealth of Australia’s billionaires increased by 70 percent in the first three years of this decade, according to the latest Oxfam Inequality Report, and fully doubled for the richest three Australians – two mining barons and a property developer.

The Labor government has done little to ease the cost-of-living crisis. This is not surprising, considering the message they took into the 2022 federal election. When Albanese replaced Bill Shorten as party leader in 2019, he axed Labor’s mild program of wealth redistribution that included tackling generous tax concessions to the middle class and wealthy. Just days before the election, Jim Chalmers, the soon-to-be Treasurer, told the National Press Club: “We want to be a pro-business, pro-employer Labor party”.

Albanese tried to be a little more balanced on election night, saying: “We can work in common interests with business and unions to drive productivity, lift wages and profits”. But in order to provide relief for the millions of people struggling with rising costs, the government needs to make capital pay in one way or another: price caps, a super profits tax, restricting property investment. Capitalism is a zero-sum game between bosses and workers, particularly when the economy is in trouble. But Labor is first and foremost the “pro-business” government.

It has claimed the tiniest of measures as great victories, for instance a $40 increase to fortnightly welfare payments and $500 energy subsidy for very-low-income households. But these are measly figures, and the households that receive them are still worse off than they were three years ago. They also only apply to a minority of people, welfare recipients, which holds to the neoliberal idea that government assistance should only happen on a small scale and only for the very poorest, rather than expansive policies that would benefit the working class as a whole.

Labor has trumpeted the Housing Australia Future Fund (HAFF) as a major step in tackling the housing crisis. But when you crunch the numbers, the new funding is enough to build around 6,000 homes a year. There are currently 175,000 people on the social housing waitlist, and it’s increasing by 10–15,000 a year – so this policy won’t even keep pace with the rate in which the waitlist is increasing, let alone start to reduce it.

In January, Labor announced changes to the deeply unpopular Stage 3 tax cuts, a Liberal government policy that was set to give the rich an extra $9,000 a year, while taxes on middle-income earners would increase. That Labor felt compelled to amend the policy after defending it for years reflects mounting popular pressure about the cost-of-living crisis and a dip in opinion polls for the government at the end of last year. But the new version is still a regressive tax policy. Those in the top income bracket (who earn more than $190,000 a year) will receive a $4,500 reduction in their tax bill, while middle income earners will receive only a $780 benefit. The lowest 40 percent of income earners will receive less than 10 percent of the total benefits.

In response to growing pressure about supermarket prices, the government commissioned a review headed by former Labor minister Craig Emerson. But the findings, which were handed down in April, will, if anything, raise prices for consumers. The inquiry focused on the relationship between the major supermarkets and their suppliers, and recommended a series of measures that would improve the bargaining power of suppliers. The supermarkets can then simply pass on any extra costs to consumers. Emerson tried to square this circle in an opinion piece for the Financial Review, arguing that suppliers would be better able to invest in “innovation and equipment that would enable them to offer better-quality products at lower prices”. This argument exists in the same fantasy land as trickle-down economics.

It’s easy to think of policies that would actually ease the burden. In addition to those listed above, the government could substantially lift welfare payments and public sector wages, build more public housing and cap rents.

And it’s not as though Labor isn’t spending any money. It has committed $370 billion to purchasing nuclear-powered submarines, provides more than $11 billion a year in subsidies and tax breaks to the fossil fuel industry, forgoes $50 billion a year with its property investor tax incentives and is cutting income taxes to benefit high income earners disproportionately.

The Greens under the leadership of Adam Bandt have taken something of a social democratic turn. Their strategy in the last election was less about challenging the Liberal Party in some inner-city blue-ribbon seats (a mantle taken up by the Teal independents), and more about relating to young people and those frustrated by Labor’s right-wing politics.

Since Labor took office, the Greens have publicly criticised some of the worst aspects of the government, most recently its response to the genocide in Gaza. They have positioned themselves as the party of renters, opposed the regressive Stage 3 tax cuts and called for Labor to raise the rate of welfare to $88 a day.

But political parties must be judged not just by what they say, but by what they do. And the Greens have done little. Despite holding the balance of power in the Senate, the Greens have not used this to force substantial concessions out of Labor. After criticising key policies like the HAFF, they have folded and ended up voting them through. This is no way to mount a challenge to a right-wing government.

For years, the primary strategy of the Greens has in effect been to hold the balance of power during a Labor government, and then negotiate from this position of strength. They have achieved this twice, from 2010 to 2013, and again at the last election. But this strategy has borne no fruit for progressive social change. In 2010, all the Greens achieved was the establishment of the Parliamentary Budget Office – a measure that is unlikely to make it to the history books. They are failing even on their own terms.

The party’s glaring weakness is its commitment to electoral politics as the main, even only, way to change society. The Greens still occasionally refer to their activist roots, and some Greens politicians will speak at rallies or share activist events on social media. But they are not trying to mobilise their membership or support base to rebuild social movements or a combative union movement. This has been notable at the weekly demonstrations in solidarity with Palestine in Melbourne and Sydney, where at best only a handful of Greens flags can be spotted in the crowds.

Like all political parties, their strategy flows from their analysis of the world: that capitalism is not in and of itself the problem, it just needs to be better regulated by intelligent politicians. Bandt spelled this out in an interview with The Monthly in 2020, arguing he would rather his daughters “live a long life under Green capitalism than a short, nasty, brutish life facing climate collapse”. But the Green capitalism Bandt longs for is another fantasy – one only need look at the escalating carbon emissions, deforestation and rising temperatures. Having a few extra Greens MPs sitting in Canberra has done precisely nothing to turn the situation around.

More recently, the Greens have embraced the supposed power of competitive market forces as a tool to tackle rising supermarket prices. In March, they introduced a bill seeking to introduce divestiture powers into Australian competition law to allow regulators to break up the supermarket duopoly. As though opening more IGAs or bringing back Franklins is going to lighten the load.

Nevertheless, the Greens are widening their support base, particularly among young voters. At the last election, they secured 12.2 percent of the general vote, but won a third of 18- to 34-year-olds. This likely reflects a new generation of voters who feel little hope about a future of skyrocketing housing costs and runaway climate change. It’s an important shift among young people, which hopefully can be funnelled into a more fruitful political project in the future.

The other institution one might expect to fight for workers in a time like this is the trade union movement. Again, things have been sadly lacking on this front. Union density is at an all-time low of 12.5 percent – which drops to 5 percent for workers in their early- to mid-20s – but there are still around 1.4 million union members in Australia. If mobilised, this power would be formidable.

But the approach of the Australian Council of Trade Unions has not been to organise and fight. Instead, it has pumped out endless surveys, inquiries and press releases. This is an elaborate way of doing nothing.

It’s been a long time since there was a genuinely combative union movement in Australia, but it’s even worse under an ALP government. The union leaders are structurally and politically tied to the Labor Party and basically function as a wing of the government when Labor is in office. The unions talk a lot about the cost-of-living crisis, but their fire is aimed solely at major corporations, without a peep about the government. This is an utter betrayal of the union membership considering the scale of the assault on workers in Australia.

Looking at how union politics have played out on a state level in recent years is instructive. There was an uptick in the number of workers going on strike in 2021 to 2022, largely due to a few big public sector strikes such as those by teachers and nurses in NSW when Dominic Perrottet’s Liberal government was in office. But the outcome was dismal. The unions wrapped up their campaign in the lead-up to the 2023 NSW state election and jumped on board Chris Minns’ Labor campaign. Only the teachers won a pay rise above inflation, which was partly reflective of the fact they were the worst paid teachers in the country and there were serious concerns that too many would leave the state during a teaching crisis.

Meanwhile, in Victoria the situation was even worse. The Australian Education Union signed with the Daniel Andrews Labor government to accept a 1.5 percent pay cap while inflation was already running above 5 percent.

All of this could very well amount to a potential opportunity for the right. The European far right, and Trump, surged in popularity following the economic devastation of the Global Financial Crisis and austerity. While the same phenomenon is yet to gain prominence in Australia, we’re starting to get a whiff of it.

Peter Dutton is trying to make a running from right-wing attacks on the Labor government and a series of racist scare campaigns. This is partly just reverting to the traditional Liberal party playbook, and partly because Dutton has little else to offer. The Liberals – who remain Australian capitalism’s A team – will not introduce sweeping economic reforms, even if they take the occasional populist potshots.

Last year, Dutton argued that a surge in migration was responsible for the housing crisis. For the last 18 months, there has been a recurring hysteria about Indigenous children in Alice Springs, culminating in an evening curfew for under-18-year-olds in March and April. More recently, refugees have been in the firing line.

The Liberals are not the only ones fanning the flames. The mainstream media has predictably amplified every racist comment and fed the moral panics. Labor has either capitulated or been a willing participant in all these issues – it’s a Labor government in the Northern Territory that has swelled the number of cops on the streets of Alice Springs, and the Albanese government that is trying to imprison refugees who do not comply with their own deportation and to deny visas to residents of entire countries.

While Labor continues to do nothing to address the cost-of-living crisis, more people could be open to such arguments. After all, immigrants and refugees have long been a useful scapegoat for the neoliberal hellscape. Migration is at the centre of right-wing politics in the UK, US and Europe.

On the whole, it is a bleak time for Australian workers and politics. But there are some bright spots. That thousands of people have rallied week in and week out against a genocide happening on the other side of the world is cause for hope; as is the growing youth dissatisfaction with the state of society and mainstream political parties. Polling indicates that millennials are not following the well-trodden path of shifting to the right once they hit their mid-30s.

Dissatisfaction and despair can head in several different directions: depressed resignation, a right-wing backlash that picks the wrong targets to blame, or progressive movements that fight to make the world a better place. Politics and organisation determine how people respond at a time like this. We need to rebuild a genuine fighting left, in politics and in the unions. A left that won’t capitulate, compromise and sell out.

References

Albanese, Anthony 2022, “Prime Minister-elect Anthony Albanese’s victory speech in full”, The Sydney Morning Herald, 22 May. https://www.smh.com.au/politics/federal/prime-minister-elect-anthony-albanese-s-victory-speech-in-full-20220522-p5andv.html

Chalmers, Jim 2022, “National Press Club Q&A”, 5 April. https://jimchalmers.org/latest-news/transcripts/national-press-club-q-a-05-04-22/

Emerson, Craig 2024, “Compulsory grocery code strikes right balance”, Financial Review, 7 April. https://www.afr.com/companies/retail/compulsory-grocery-code-strikes-right-balance-20240407-p5fhx6

Simons, Margaret 2020, “Adam Bandt, the personable hardliner”, The Monthly, May. https://www.themonthly.com.au/issue/2020/may/1588255200/margaret-simons/adam-bandt-personable-hardliner#mtr

1 Chalmers 2022.

2 Albanese 2022.

3 Emerson 2024.

4 Simons 2020.