It's not a joke, Howard

May 25, 2007

Just a week after Treasurer Peter Costello delivered the federal budget, which contained $31.5 billion in tax cuts over four years among other pre-election bribes, a Newspoll published in the May 15 Australian found that support for Labor had increased to 59% (on a two-party preferred basis) from 57% the previous month. Several other polls have since confirmed this trend.

PM John Howard's initial response was that those who were surveyed might have been joking when they said they intended to vote Labor. "Ultimately we'll find out whether it's not been, you know, an interesting exercise by the Australian public in its innate sense of humour", he told ABC TV.

Howard couldn't believe how ungrateful the unwashed masses were for the long economic boom, which, he said, was the result of his government's neoliberal policies.

But just last week another poll indicated that the masses were not joking. The Bulletin magazine released an IPSOS poll that showed that 36.5% of respondents feel worse off than when Howard was elected in 1996, with 18.8% feeling the same as they did then. Which means that 55% feel no better off despite the economic boom.

Most of us don't see the same the benefits of the boom that the owners of the big corporations and their CEOs do.

Here are some reasons why:

While official unemployment is at a low 4.4%, it masks significant underemployment. According to Tim Battin, a political scientist at the University of New England, the rate of casualisation, which has near doubled in 25 years, now stands at a staggering 30% of the work force.

Those of us with jobs feel more insecure and overworked than ever before thanks to decades of unremitting attacks on workers' rights to organise collectively, which started under Labor governments with the Accord and then the introduction of enterprise bargaining. And we know it's only going to get worse under Work Choices (or whatever it ends up being called).

Health, education and welfare are becoming less accessible as public services have been slashed and public assets privatised. If our children get a higher education, they start their lives with a massive HECS debt. If you get seriously sick, you are confronted with hospital bed shortages. And our retirement income is compulsorily handed over to commercial stock market gamblers.

For the first time, the average Australian household can no longer afford to buy the average Australian home. Both the Housing Industry Association and the Commonwealth Bank report that housing is now more unaffordable than at any time in the last 23 years.

They reported in February that buyers need a gross household income of $93,300 to adequately cover the mortgage bill of $2332 a month (or roughly $28,000 a year). But average household income, they estimate, is just $91,300, something which sounds better than it is because the median household income is more like $50,000 (that is, half of all households get less than this before tax).

The "wealth effect" — home owners' feeling that because of their home's inflated value over the last decade they must be more wealthy — is souring in a growing mountain of household debt. "Household debt is now over 165% of disposable income, more than double the rate of just a decade ago", a May 9 Reuters report quoted Mark Rodrigues, senior economist at ANZ banking group, as saying. "Households now spend a record 11.6% of their disposable income servicing debt."

The Reuters report noted "Soaring home repossessions in working-class suburbs of Sydney and Melbourne …" Sydney's working-class western and southern suburbs "are among the worst hit by this mountain of debt and are being forced into repossession sales. In 2006, 5363 repossession writs were issued in New South Wales, up 10% on 2005, according to court documents ..."

Michael McNamara from Australian Property Monitors told Reuters, "The disparity between the haves and have-nots is getting wider by the day. I find it quite alarming just how many mortgage holders are in distress." He predicted the situation would get worse. The NSW Sheriff's Office reported a tripling of the number of households being evicted from their homes, between 2003 and 2006, because they couldn't service their loan.

While in theory wages have exceeded the inflation rate, the official Consumer Price Index (CPI) understates the real rise in costs of essential goods and services borne by most households. The May 13 Brisbane Sunday Mail reported that "the cost of running the average Queensland household has risen by about $175 a week over the past two years, in the same period, take-home pay has risen by about $65 for the average full-time wage earner".

It added that more than 50% of households, however, have to get by on less than the average household income. Even in the national capital, the May 20 Canberra Times reported that "Moderate wages growth, coupled with the proposed tax relief package, won't go near matching significant rises in the cost of rent, electricity, water, fresh food and petrol, to name a few".

It is not just economic pain that is fueling our disenchantment. For some years the federal parliamentary research unit has noted that most Australians would like government to spend on improving social services, like health and education, rather than handing out tax cuts.

A new survey, reported in the May 24 Melbourne Age, commissioned by the Australian National Retailers Association, has found 53% of consumers would prefer fewer tax cuts and more spending on the environment.

Anyway, as Sydney Morning Herald economics editor Ross Gittins calculated recently, the Howard government's budget tax cuts have been most generous to the rich. "The big winners are people at the other end of the spectrum, those earning more than about $85,000 a year ... Seems it doesn't pay to be one of Howard's Battlers. Thanks for your votes, but the big tax cuts are going to the high-income heartland."

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