Poverty is the cruel price of neo-liberalism

October 14, 2017

Poverty is everywhere — in cities, towns and the bush across Australia: shivering people sleeping in doorways or cars; ragged people hanging around shopping centres begging for money or food; overstretched private welfare agencies unable to meet the requests for assistance; people turned away from emergency accommodation; and abused women and children turned away from refuges.

But those are only the most visible signs of poverty. The true extent of the poverty crisis is hidden.

The Australian Council of Social Services’ Poverty in Australia report estimated that 13.3% of the population, or 2.9 million people, including 730,000 children, are living below the poverty line. The poverty line is the measure defined by the OECD as 50% of a country’s median household income. A year ago it stood at $426.30 a week.

Poverty means daily financial stress, particularly, but not exclusively, for those attempting to survive on government allowances and pensions.

Daily life often boils down to a choice between skipping meals or even going a day or two without food. It can mean not paying the rent or utility bills and not heating your living room in winter. For single parents, the reality is often children without enough warm clothing or new shoes when needed, never mind excursions or after-school activities.

An estimated 36% of those relying on government benefits live below the poverty line. Many are in fragile mental health, exacerbated by the way the system treats them.

For the unemployed person on the miserable $269.40 a week Newstart allowance, there is the daily fear of arbitrary “sanctions” being imposed by a privatised job search agency.

Once their youngest child reaches the age of eight, sole parents are thrown onto Newstart with few employment prospects. The true underemployment rate (people working fewer hours than they need for financial survival) is far higher than official figures suggest. While age pensioners are treated better than other categories, those who do not own their own homes have the high cost of rent to contend with, in addition to the health problems that inevitably affect many of them.  

But it is not just those in receipt of government payments who are poor. After decades of bipartisan neoliberal labour market deregulation, privatisation, outsourcing and user-pays policies, many employed people also live in poverty

Workers must contend with stagnating and even falling wages. Full time, permanent jobs are being replaced by part-time, temporary or casual jobs. Turning regular jobs into bogus “contracting” positions without superannuation, holiday and sick pay is increasingly being used to cut workers’ incomes.

The most recent attack on wages was the Fair Work Commission’s decision to reduce weekend penalty rates for workers in the hospitality and retail industries, who are among the lowest-paid workers in the country. An appeal to the Federal Court by unions recently failed.

Employers have argued that if penalty rates are cut, the number of jobs in those industries will rise. However, there is no requirement for employers to do this, and no certainty that many of them will do anything other than pocket the money their employees have lost.

Economist John Quiggin pointed out that since the Hawke-Keating Labor government introduced the Prices and Incomes Accord in 1983 almost all industrial relations legislation passed by Labor and Coalition governments has worked to undermine the bargaining power of workers and unions.

After World War II, the Full Employment Objective was a cornerstone of government policy. It was abandoned under pressure from the political right in the 1970s and “acceptable” rates of unemployment have risen.

The rates of unemployment and underemployment are far higher than the official rate, which is based on the Australian Bureau of Statistics’ definition that anyone working for at least one hour per week is “employed”.

This further reduces workers’ bargaining power and helps to explain faltering living standards.

The housing crisis is a major factor driving poverty. The cost of this essential item remains far too high. Public housing could, if it were better funded, counteract this. But there are long waiting lists, the result of decades of neglect by state governments.

High prices are being driven by a tax system that encourages houses or units to be regarded as investment opportunities for the privileged few, rather than as places for the many to live in. Negative gearing and capital gains tax concessions on investment properties facilitate this.    

National Anti-Poverty Week is October 15–21. If we are serious about tackling poverty, we must counter the lies peddled by our opponents.

Much of the corporate media and the political class seek to defuse public anger about poverty by blaming its victims. They are out to divide us. The unemployed, in particular, are singled out for scapegoating.

Non-government sources estimate that there are 15 to 17 unemployed persons for every job vacancy. Even if you accept the ABS’s questionable definition of “employment”, there are still 3.4 unemployed people for every vacant job.

It is clear that society is not providing work for all who need it. Given this, it is contemptible to blame the unemployed for their predicament. For more than 25 years successive Labor and Coalition governments have refused to raise the unemployment benefit, apart from indexing it to the consumer price index — itself an imperfect measure of living costs. Newstart should be immediately raised and pegged to the CPI rises.

To really combat poverty we need a genuine commitment to full employment and a restoration of the bargaining powers of workers and their unions.

We need substantial rises in all government benefits and pensions, funded by a much fairer tax system that does away with systematic tax-dodging by corporations. We also need a big investment in public housing to ensure that shelter, an essential of life, is affordable for all.

[Visit the website to join in events being held around Australia to mark National Anti-Poverty Week.]

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