When it comes to household income, Australians continue to miss out on the current boom being shared elsewhere in comparable countries. Why? Because the Coalition has set the levers – tax levels, tax non-collections, wages, penalty rates, government spending, infrastructure investment or rather lack of – to maximise corporate profits at the expense of most Australians. Alan Austin reports.
ANY WAY we look at Thursday’s numbers on household wealth and income – upside down, sideways, in the mirror, or through Mathias Cormann’s nautical telescope – they indicate shocking losses for the majority of Australians.
“Household gross disposable income” measures the cash Australian families and individuals receive from all sources – jobs, investments and other streams – after paying taxes and the Medicare levy.
This is the key indicator of the share of the nation’s income going to workers and families — compared with that going to corporations, state and federal governments and foreign investors and bond holders. The Australian Bureau of Statistics (ABS) measures this quarterly in series 5232.0 on Australia’s national finances.
— George Eaton (@georgeeaton) June 27, 2019
Income growth at all-time low
This variable has always gone up reliably, with just the occasional dip. At least it has done until the current government took charge of the economy.
The latest numbers show that shifting wealth and income from households and individuals to the corporate sector and offshore is not just entrenched but is accelerating.
Our green graph shows the year-on-year increase in household income since 1993. Every year has shown positive growth. The highest this ever reached was 10.46 per cent in 2008, just before the global financial crisis whacked the whole developed world. The lowest household income growth was 2.13 per cent in 2003, which was a correction after a bumper 2002.
The average since 1993 is 5.62 per cent. Only five times has the annual increase been below 3.0 per cent. They were in 2003 and the last four years.
This chart presents visually the increase in household income each year for the whole of the economy. The picture worsens considerably when we look at the results per household or per person.
Income per person
The mauve chart shows the annual growth in household wealth when adjusted for the population increase. (We get the adult population from the ABS jobs file, number 2602, table 1 column DI.)
Again, this shows positive growth every year, including through the early 2000s recession and the global financial crisis which hit in 2008. The average growth since records have been kept is 4.01 per cent. The highest was 8.37 per cent in 2002, just beating the 8.24 per cent rise achieved in 2008.
The lowest by far was in 2017, at just 0.64 percent. The last four years to March have been among the five worst since records have been kept.
Poorer after inflation
This year’s nominal increase in income per adult of 1.01 per cent was actually a real decline, when adjusted for inflation at 1.3 per cent. The 2017 increase of just 0.64 per cent was a real decline of negative 1.46 per cent after allowing for 2.1 per cent inflation that year.
The actual dollar value of gross disposable household income per adult for the March quarter was $14,745. For the full year, it comes to $59,726. That represents virtually no increase since the 2013 change of government after allowing for inflation. Hence nearly all the real increase in Australia’s wealth under the current administration has either been squandered by the Government or shunted to the rich corporations or offshore.
This would be an extraordinary outcome even in poor or average global circumstances. But these are not normal times. The last five years have seen the strongest boom in investment, jobs, corporate profits and executive salaries and bonuses since World War II.
No OECD member country is currently in recession. In the entire world, only three countries – Argentina, Indonesia and Trinidad and Tobago – are in a shallow technical recession. Many developed countries have jobless rates close to the all-time low. Only two poorly-managed developed countries have increased government debt by more than ten per cent since 2013 — Australia and Chile.
The last five years should have seen the strongest growth in household incomes on record, not the weakest.
Seriously declining wealth per person
Total household wealth – as distinct from income – at the end of March was just $10.24 trillion. That is a decline of 2.38 per cent – or $69.8 billion – over the year to March 2018.
Again, this is worse when analysed per person. The decline in household wealth per adult was $12,190 over the year to March. The decline since the end of 2017 is now $14,900.
The same ABS file (Table 32, column M) shows household net savings in March was just $7.68 billion. That’s a thumping 27 per cent below the level of $10.58 billion for March last year. Household savings have declined every year since 2014.
Why is this happening?
There is no reasonable justification for this. It is not happening elsewhere. All indicators of wealth distribution in comparable countries show the proceeds of the current boom are being shared.
In those few countries where there is evidence of disparity, the citizens are letting their feelings be known, as in France with the highly effective gilets jaunes protests.
The only explanation is that the Coalition has set the levers – tax levels, tax non-collections, wages, penalty rates, government spending, infrastructure investment or lack thereof – to maximise corporate profits and minimise incomes for the vast majority.
The mainstream media knows all this is happening but is saying nothing for the obvious reason that most are now owned and operated for the benefit of the big corporations.
If only there was some democratic way for the majority of Australians to swap the current administration for one with a record of actually serving their interests.
Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.
You can follow Alan on Twitter @alanaustin001 .
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