How “lucky” is Australia?

April 12, 2013
Prime Minister Julia Gillard before last month's leadership spill.

Those who live in Australia are used to hearing about how lucky they are. The idea that Australians just don’t realise their luck has become popular in the lead up to the next federal election by some who feel that it would be crazy to vote out the federal Labor government.

When Kevin Rudd challenged the prime minister’s leadership in March, Australian journalist Paola Totaro, writing for the Guardian in Britain said: “Viewed from Europe, where national governments are planning to bail out their banks by raiding the savings accounts not just of Russian oligarchs but pensioners too, news of yet another political attack against Australia's leader smacks of a particular strain of antipodean madness.

“For decades, it is the British who have worn the ‘whingeing Poms’ label. Now, it's time for Australians to accept the malcontents’ mantle, because it is they who appear incapable of seeing just how lucky they are.”

The basis for this argument is that the Australian economy is “powering ahead” and is “basking in more sunshine than the rest of us can dream up”.

The idea can also be seen in mainstream culture. Comedian Adam Hills remarked during the Logies on April 7: “I think it's fair to say Australia does have the best lifestyle in the world. We are one of the wealthiest countries on the planet, we've got the most stable economy, we've got the best standard of living and that's why people are talking about voting out the current government.

“Like seriously, I've just come back from London and they are so poor over there, they look at us and they can't believe we're considering getting a new government.”

Is it true that Australians are just ungrateful?

Looking at the figures, it is correct that Australia has had 21 years of economic growth, though the reality is more mixed than t seems. Since 1992, gross domestic product per capita in Australia has risen by 64%, which is fairly impressive — though it pales in comparison to China which has grown by 553% in the same period.

GDP, though, is just an aggregate of goods and services in an economy, it doesn't explain where the wealth is going.

In 2012, the wage share of the economy was 53.8%, in 1992 it was 59.3%. At the same time, we have seen an explosion in labour productivity. From 1992 to 2008 real wages increased by 16.7%, while productivity has increased in the same time by just under 60%.

So, wages are not rising with productivity. Workers are producing more but getting paid less for what they produce. The surplus is instead going to profits — which mostly benefits the ruling class. In 1992, profit share was 22.5% of GDP, now it is 27.8%.

Perhaps a reason why people may feel so glum is that we are all told about this impressive growth, yet the benefits are not going to ordinary people.

In fact, workers have relatively lower wages in order to buy goods and services, so they have to put themselves in debt to afford them.

As the Australian Bureau of Statistics said: “Based on information from the Reserve Bank of Australia, over the last 18 years the total amount of debt owed by Australian households rose almost six-fold. At September 1990 the level of household debt was almost $190 billion, increasing to around $1.1 trillion by September 2008 in real terms (i.e. adjusted to remove the effect of inflation).”

Since 2008, household debt has risen. In 2012, it was at $1.545 trillion dollars.

This consequential shift from wages to profits has led to a more unequal society. From the available figures, from 1996 to 2008, the top 20% were the only sector to see their income distribution go up, everyone else’s went down.

And this is despite living through the much-vaunted mineral resources boom.

A refusal to tax mining companies at an adequate level means the benefits of the boom have mostly gone to mining magnates and a small layer of workers earning high wages.

It is clear what 21 years of economic growth means for the majority of people. We are producing more but getting paid less for what we produce. We are going into debt at unprecedented levels, profits are rising at a much higher level than wages and we now live in a more unequal society. This situation cannot continue without large political consequences.

During the pre-credit crunch era of John Howard, the discontent was much less obvious because the government encouraged people to go into debt in order to get ahead. Hence, policies like the first homebuyers bonus promoted the idea of the “aspirational” person striving to “make it”.

The harsh truth is most of those aspirational people are now tied to the banks and drowning in debt.

The introduction of “Work Choices” made it clear that what Howard aspired to was a quicker transfer of wealth from wages to profit.

Howard's project unraveled at this point as the discontent that had been bubbling surfaced and people didn't like the uglier, more unequal society they were left with.

Rudd’s rise came with the promise of a more “united society” and a promise to undo some of the most blatant ugliness of the Howard years by apologising to the stolen generations, getting rid of the pacific solution and signing the Kyoto protocol.

But in general, the economic regime continued much the same, until Rudd proposed a policy which would shift a small amount of mining profits to the public. A month later, he was brought down by the Labor party factions on behalf of the mining companies.

Under Julia Gillard, the mining tax was destroyed to the point of insignificance. Treatment of refugees is worse than under Howard, and she has whipped up racist fear of foreigners taking Australian jobs. This has shifted politics to the right in this country and allowed Coalition leader Tony Abbott to endorse even harsher policies.

In this context, there are plenty of reasons why people would vote out the Labor government. But although the Coalition looks likely to win in September, that does not mean Abbott or his conservative politics are popular.

The latest Newspoll had Abbott's approval rating at 35% while 54% disapproved, while Gillard had an approval rating of 28% while 62% disapproved.

The Australian Financial Review conducted a poll which found “despite Labor being on track for a rout on election day, 53% of all voters in marginal seats want Labor to win the election, whereas just 43% want the Coalition to win.”

It’s a bizarre state of affairs when people want Labor to win, but won’t vote for them.

It points to the hidden discontentment that people have for both parties. Neither party is able to solve the problems facing most Australians because both parties are committed to continuing the economic project that is causing people to work harder and get into more debt.

Australians will be lucky when they are able to be involved in a political process that truly represents them — one that doesn’t just offer hope, but delivers on it.

See also: Tony Abbott's hidden agenda

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