A new report from Oxfam, released on the eve of the World Economic Forum, revealed that Australia’s richest 1% owned 23% of the country’s total wealth last year, up from 22% the year before, and more than the bottom 70% combined.
Based on data from Credit Suisse, the report also revealed that Australia now has 33 billionaires, up by 8 in the past year alone.
The Oxfam report shows that inequality is worsening.
Cost of living
If it feels like it is getting harder to make ends meet, that’s because it is. The 2015–16 Household Expenditure Survey, released by the ABS in September last year, showed that the rising cost of housing, energy and education is pushing households deeper into debt.
According to the survey, the average family spent about $1425 a week ($190 more than six years earlier) and household debt has doubled since 2003–04, with the average family owing $169,000 — 90% of which is property debt.
According to the ABS nearly 30% of households are over-burdened with debt, with mortgages the driving cause.
The Big Four banks each have 40–50% of their loan books with interest-only loans, a total of $1 trillion worth of home loans where people are not making any dent in their mortgages.
Already 820,000 households, or 1 in 4, are in mortgage stress. This is a mortgage crisis waiting to happen when these interest-only loans convert to principal and interest loans after five years.
The largest weekly expense for families is housing (rent and mortgages) — unsurprisingly — followed by food and then transport.
Spending on power and energy has jumped 26% since 2009–10 — an increase of 11% in real terms — and spending on education has jumped 24% in six years. Privatisation of electricity has meant escalating (and continuing) price rises — at three times the rate of CPI increases.
There is now a wave of people withdrawing from their superannuation funds to keep their heads above water. According to media reports, $290 million was released early from the superannuation system in 2016–17 on compassionate grounds. Nearly three-quarters of that was spent on medical treatment and transport, with about 15,000 Australians accessing their superannuation early for such purposes.
Corporations dodge tax
While workers struggle to keep a roof over their heads, major corporations and multinational companies are dodging up to $3.5 billion in company tax every year, according to figures released by the Australian Taxation Office in October last year.
To deflect from the broad sentiment that the taxation system is rigged for the corporations and the rich, Prime Minister Malcolm Turnbull has promised personal income tax cuts will be announced before the 2019 federal election.
However, at the same time Turnbull’s government intends to cut the company tax rate to 25% over the next decade. Combined with a $44 billion Medicare Levy hike that will neutralise any benefit to low or medium wage earners, the tax burden continues to fall on working people, while the rich and corporations get away with paying little or no tax.
Unemployed sentenced to poverty
At a measly $269 a week, Newstart is $160 a week below the poverty line; less than 41% of the minimum wage and less than 18% of the average wage. It has not been raised in real terms for 23 years, which is part of the reason why Australia ranks second-worst among developed nations for poverty among the unemployed.
Not only is Newstart too low to live on, there is a lack of jobs — in fact there is only one job for every 17 job-seekers. That translates to 1.8 million unemployed and underemployed in Australia competing for just 170,000 job vacancies.
In some areas, recipients are being subjected to humiliating drug tests with a punitive demerit point system. According to the Anti-Poverty Network South Australia, in the past year two million penalties, payment suspensions or fines were imposed on jobseekers.
For Aboriginal or Torres Strait Islander people the situation is much worse.
The federal government’s Community Development Program (CDP), which is now an Indigenous work-for-the-dole-scheme, forces unemployed people in remote locations to work up to three times longer than city-based jobseekers to receive welfare.
The rate of underemployment, which represents the number of people who have fewer hours of work than they need, remains high at 8.8% compared to the unemployment rate, which is now 5.9%.
Other workers are encouraged to blame the poor and the unemployed for their plight, but the system is to blame. Unemployment, underemployment and poverty are structural failures of capitalism.
Wages down, profits up
For those in work, most have not had a pay rise in real terms in years and wages remain at their lowest share of total income in half a century.
Wage restraint has its roots in the policies of the Bob Hawke and Paul Keating Labor governments in the 1980s and 1990s under the Accord. The dampening down of industrial struggle paved the way for an escalation of attacks on unions and the right to organise on the job, which over four decades has eroded workers’ power to fight, including for wage rises.
As a result, the typical family takes home less today than it did in 2009, according to the latest Household Income and Labour Dynamics (HILDA) survey released last August, and wages are not keeping up with inflation.
But not everyone has struggled to raise their income. The share of disposable income after tax accruing to the top 20% of earners has risen by about 2.5% while the share for everyone else has gone down over the 10 years between 2003–04 and 2013–14.
As the Oxfam report states, the system is broken. But it will take more than appeals to governments to solve the crisis of wealth concentration at the top.
Workers need to organise a fight to defend wages and living standards. They also need to be won to a broader struggle in solidarity with all those exploited and marginalised by the system.
It will take a people’s movement to challenge the power of the corporations and the governments that serve them, and to move beyond capitalism to a human-centred society where human need and protection of the environment, not profit, are the driving forces.