The Guardian • Issue #2091

CAPITALISM

One in eight in poverty

Empty wallet.

Photo: Marco Verch foto.wuestenigel.com – flickr.com (CC BY 2.0 Deed)

Living standards for the majority of Australians continue to fall while the gap between the wealthy and middle to low-income workers widens. The Reserve Bank of Australia has successfully driven millions of workers and their families into recession, impoverished them, with successive interest rate hikes while big business flourished paying next to no tax on profits.

We have a two-tier society when it comes to health services, education, housing, putting food on the table, paying power bills, or keeping your house cool in record high temperatures. Millions of people are being forced to make choices between everyday essentials.

Not only do we have the working poor, but we are now witnessing the working homeless. Having a job is no longer a guarantee of having a roof over your head. Economists say real wages rose last year, but not for all workers, especially those on low incomes.

The Consumer Price Index has risen by 17 per cent over the last five years. Only the highest paid and most militant organised workers can claim their wages kept up.

“The living standards of people on low incomes have taken a huge hit over the past year. Real household income, employment, and housing construction are in a nosedive while rents soar,” Australian Council of Social Service (ACOSS) CEO Sandra Goldie said.

“For people already unemployed, it is impossible to survive on $54 a day. It’s wrong for a nation as wealthy as Australia to condemn 872,000 people relying on JobSeeker to abject poverty.” JobSeeker is a punitive system. CentreLink staff cuts have not been fully restored. Phones go unanswered. The system is almost impossible to navigate, especially for the homeless, people with disability, and Indigenous Australians.

One in eight Australians live below the poverty line, while taxes in this country are the ninth-lowest in the OECD. A disproportionate number of Aboriginal and Torres Strait Islanders are living in poverty, many in ‘third world’ conditions. Income support payments must be raised and the tax concessions for the rich and large corporations be removed. The recently amended tax cuts for the rich still promote inequality.

HOUSING

Billions of dollars in government revenue are forgone by tax concessions to property owners. The Tax Expenditures and Insights Statements published by the Department of Treasury and Finance detail various property tax concessions. These only tell half the story.

Per Capita reports: “The share of total federal housing expenditure going to property investors rose from 16.5 per cent in 1993-94 to 61.4 per cent in 2021-22.

“Investor tax concessions have grown from $1.5 billion in 2000 to an estimated $18 billion in 2024, effectively operating as a shadow housing policy with a significant impact on the market.

“In 2023-2024, federal investor tax breaks will be worth more than ten times the amount spent by the Federal government on social housing and homelessness services through the National Housing and Homelessness Agreement.”

State and federal governments have wound back public housing to its lowest level for decades and sold off the land to developers to make a mint

Rents are unregulated. Housing prices are unregulated. Housing has been commodified and has become unaffordable.

CLIMATE CHANGE

“There are about 1.8 million low-income households in Australia who cannot afford to escape extreme temperatures because they’re stuck in inefficient homes that are expensive to warm or cool,” ACOSS Climate & Energy Program Director Kellie Caught said.

A survey conducted by ACOSS in partnership with First Nations Clean Energy Network of 1,007 people across Australia found 80 per cent of people were living in homes that are too hot in summer. It is set to get hotter. For those sleeping rough, there is no relief.

Eighty per cent said high temperatures in the home made them unwell and 14 per cent had sought medical attention for heat stress. That figure was 25 per cent for First Nations respondents. Most affected were those with chronic illness and or living with disability.

“In the May budget, the government must invest further in energy efficiency, electrification and rooftop solar across all low-income housing types, incentivise minimum energy efficiency rental standards, and raise the rate of JobSeeker and related payments,” Goldie said.

COST OF TAX CONCESSIONS

The government foregoes $28.35 billion on earnings from superannuation funds because of the 15 per cent concessional tax rate and another $21.30 billion in taxation of on employer contributions. In many low-income cases the 15 per cent concessional tax rate is higher than the rate they would have paid. The system is distorted, maximising benefits for the wealthy.

The total amount on super tax concessions is fast approaching the cost of the age pension.

The 50 per cent tax concession on capital gains tax where an asset has been held for at least 12 months costs the government $19.05 billion. Another costly loss to the budget which benefits the wealthy.

POLITICAL RAMIFICATIONS

In the decades leading up to the 1970s many progressive reforms were carried out by governments. The public sector was built up. There were state banks and state insurance companies. Utilities were publicly owned. Public works departments built public housing, schools, hospitals, and other essential infrastructure. Public transport was owned, run, and subsidised by the public purse. Public was not a dirty word.

The age pension was on the path to becoming universal. The Whitlam government reforms included Medibank, a then-universally accessible bulk billing medical scheme. This has been dismantled, and the rapacious, profit-driven private developers have moved in with its replacement, Medicare, in crisis.

When the neoliberals took over in the 1980s, they embarked on a program of deregulation and privatisation. Almost anything that could be privatised has been, including critical government services. Private, for-profit corporations such as Serco and Price Waterhouse perform the work of public servants. Thousands of public servants were sacked, their work outsourced at a far higher cost to the taxpayer.

The result is windfall private profits for the few and increasing impoverishment of workers and their families.

This situation is not unique to Australia but is evident in other wealthy countries, perhaps most strikingly in the USA.

The economic crisis facing millions of people in Australia, across Europe, the UK, and northern America is seeing the rise of extreme right, anti-worker, nationalist, and fascistic political forces who are winning growing support with populist propaganda that targets the most disadvantaged and vulnerable.

Hard-won democratic rights have been eroded over those decades of neoliberalism. The task of taking collective action to defeat the neoliberals and reverse their policies is urgent. The state has is critical to providing services that put people first.

This can only be done by mass united action and the election of a people’s government that puts people before profits. It’s called socialism.

POLICY

In the meantime, the government must be pressured to end poverty now:

  • Increase JobSeeker payments and other social security payments to above the poverty line.
  • Commence a massive public housing building program
  • Control rent increases
  • Establish a national public bank with a social charter that provides affordable loans
  • End tax concessions on the wealthy and fossil fuel projects
  • Cancel the $368 billion nuclear submarine program and military spending on US war preparations
  • Nationalise energy companies
  • Legislate the unfettered right for trade unions to take industrial action to be able to fight for their rights, higher wages, better working conditions and the above policies.

“In a country as wealthy as Australia, poverty is a choice – our government’s choice. The solutions are clear. It’s time now to act,” Goldie said.

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