There is no justification for the Reserve Bank Board increasing interest rates. Allowing banks to make more profits does not make the economy robust. Australia is not in a recession or on the cusp of one.
The interest rate hikes are an opportunity for banks to increase their profit yield. Had rates not been raised, even once, since the contrived pandemonium of a “looming recession”, the banks would still be profiting.
Further, cost-of-living pressures would have been much more manageable for the everyday person.
The federal government should legislate for a mortgage interest rate freeze — a moratorium. This should be done concomitantly with a nationwide rent freeze.
Spending by ordinary people on everyday living and not on increased mortgage payments and rent hikes would have kept inflation down. It has also been unnecessarily bloated to keep big retailer profits up while real wages remain stagnant — an uninterrupted nightmare for four decades.
During the first two years of the pandemic, Australia’s 47 billionaires doubled their combined wealth to $255 billion.
The world’s 10 richest individuals, during that two years, doubled their combined plunder to $1.9 trillion.
Why are the world’s richest individuals being protected in times of austerity?
Ten million Australian workers are struggling: it has been a four-decade race to the bottom. For the poorest, the underemployed and the unemployed, it has been a brutal public spectacle, with suicides on the rise. For too many there is no living wage, just sacrifice and effective beggary.
Since 1983, real labour costs have been reduced by 24%, while the net share of national income consigned to profits rose to its present record high of 32%.
Recent investigations into the impacts of underemployment and unemployment have found 10% of the increasing suicide toll in this country is directly related to unliveable wages and unemployment.
The link between unemployment and low wages to suicide has been known for some time. The lowest quintile of income comprises the most significant proportion of suicides. Researchers published their findings in Science Advances in a report titled, Unemployment and underemployment are causes of suicide.
They estimate that from 2004–2016 more than 3000 people died by suicide, directly attributable to unemployment and underemployment. The researchers want their findings to galvanise governments to take action.
The last four decades have indentured Australians to lower wages, longer working hours and masked unemployment at around 5% of eligible working-age people, instead of more than 20%. The paltry Centrelink payments have not risen, while the top few percent run away with unimaginable profit-making.
Forbes reported in May there are nearly 2700 billionaires, with the top 10 individuals each worth more than $100 billion. The richest individual is worth nearly $250 billion.
The coveting of such wealth, greater than sovereign nations, damns humanity. If an individual were to save $10,000 each day for 70,000 years, they would still not accumulate as much as the world’s richest individual, who is aged 51.
Where is the taxation system to ensure a society in which people are not the serfs of the rich?
We must not disaggregate income base to quartiles or quintiles. Even deciles are inadequate for taxation purposes. Deciles of income base do not adequately reflect the ranging variable socioeconomic stressors. We need “ventiles” — divisions of 20 — where the income base is tax bracketed to 20 subsections.
However, the highest two ventiles of income should be disaggregated by deciles – as the income in those two ventiles, particularly the top one, varies wildly.
Because of the RBA’s unjustifiable interest rate hikes nearly 30% of mortgage holders have been put in at-risk precariousness and not just in mortgage stress. That’s nearly 1.5 million people looking likely to lose their home or be forced to sell.
Roy Morgan research found mortgage stress had risen by around 540,000 mortgagees in the last year, during the RBA’s 12 interest rate hikes over its last 14 meetings. Australia now suffers from the highest cash rate — 4.1% — since 2012.
But the top end of town is persistently taking in record profits. The combined wealth of the world’s billionaires – $15 trillion – could end poverty worldwide.
Australia’s national net wealth, if redistributed, could end the crushing poverty which directly accounts for at least 10% of the suicide toll.
Australia’s GDP per capita rank is 10th in the world. Total wealth, as of the end of last year, surpassed $11 trillion. In recent years, national net wealth hovered between $11-$15 trillion.
Australia can afford to build all unmet public and social housing — 180,000 homes — at less than $100 billion. It can afford to substantively raise JohKeeper and the Aged Pension and other benefits and ensure a living wage.
It must have the courage to raise real wages and put people first. The minimum wage must be raised by more than that gold coin nonsense.
We need a moratorium on rent and mortgage payments – and the 12 interest rate hikes must be rescinded. Why? Because it is possible and it is the right thing to do. A fair taxation system, with arithmetic firmament, saves lives and will make for a better humanity.
[Gerry Georgatos is the founder of The Georgatos Foundation.]