The ongoing 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. But 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.

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.

Second is the housing crisis. Twenty-five years ago, the average house was worth nine times the disposable household income per capita; 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.

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, according to the Bureau of Statistics. 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. 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 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, but they have not risen more than inflation on non-discretionary items, 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.

The one small solace of the last few years has been that unemployment has not risen sharply. But it is starting to tick up, and 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 is up 17 percent since September 2021, according to Reserve Bank figures.

The overall picture of the last few years is that prices have gone up, real wages have gone down and people are taking on larger amounts of debt.

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.

The Labor government has done little to ease the cost-of-living crisis. 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 apply only to a minority of those feeling the pressure, and the households that receive them are still worse off than they were three years ago.

Labor has also trumpeted the Housing Australia Future Fund 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.

It’s easy to think of policies that would ease the burden: cap prices on essential items, substantially lift welfare payments, limit the number of houses any individual can buy, build more public housing, 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.

None of this should come as a surprise. On the eve of the 2022 federal election, future Treasurer Jim Chalmers told the National Press Club that Labor wants to be a “pro-business, pro-employer party”.

Since Labor took office, the Greens have publicly criticised some of the worst aspects of the government. 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.

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.

There was an uptick in industrial disputes in 2021, largely due to a few big public sector strikes such as by teachers and nurses in NSW. 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.

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.

We need to rebuild a genuine fighting left, in politics and in the unions. A left that won’t capitulate, compromise and sell out.