The Guardian • Issue #2102

The poverty of policy

Poverty in Sydney.

Poverty in Sydney. Photo: Carey Ciuro – flickr.com (CC BY-NC 2.0)

The Fair Work Commission has increased both minimum and award wages by 3.75 per cent from 1 July when the tax cuts for middle to high incomes also commence. The increase is a fraction higher than the 3.6 per cent rise in prices over the 12 months to April 2024.

This brings the national minimum wage to $24.10 per hour or $913.91 per week, based on a 38-hour week. This amounts to an increase of $33.10 per week or $1,721 per year for full-time workers. It hardly scratches the surface of hardships facing families, as landlords hike rents by anything up to $200 or more a week and electricity bills soar.

The main beneficiaries of the wage increase will be women who are more likely to be on minimum or award wages and working in low-paid ‘feminised’ jobs. They are also more likely to be in casual employment and not full-time, so their gain will be even less than the $1,721 per-year maximum.

The Fair Work Commission’s decision entrenches and perpetuates the Albanese government’s poverty of policies, after more than a decade of falling and stagnating wages, especially for those on low incomes.

Millions of Australians are now in their own personal recessions, struggling from day to day, skipping meals, and relying on charities for food and assistance with bills.

There is no sign of relief in sight. At the same time the government, the Reserve Bank of Australia (RBA), and large corporations continue to impose further hardships on workers and social security recipients.

CALLOUS

The government callously refuses to increase Jobseeker, the Youth Allowance and pensions. It refuses to cut the billions of dollars in debt for university fees, let alone abolish higher education fees.

There is a lot the government could do to address the cost of living crisis. For example, it could impose caps on rent increases, and force energy and telecommunications companies to reduce prices, or better still nationalise them. Abolishing higher education fees and debt would also be of great assistance. (For more measures see Guardian 2101, “People’s budget – Working class solutions”)

The government has failed to take serious action to curb price rorting by large corporations, in particular the dominant supermarket duopoly and the ‘Big Four’ banks. Instead, it is promising price surveillance. While living standards of ordinary Australians plummet, banks and the duopoly continue to rake in record profits.

Hardship applications to banks and utilities have risen considerably.

RBA interest rate hikes are increasingly taking their toll, driving housing prices, rents and mortgage repayment even higher. More Australians are falling behind on their mortgage repayments as the combination of inflation and high-interest rates bites deeper into already over-stretched family budgets.

The RBA has wielded its blunt instrument of interest rate rises to tackle inflation. In doing so, it is successfully achieving its goal of increasing unemployment and lowering living standards.

INSOLVENCIES

The Australian Securities and Investments Commission’s (ASIC) annual statistics for insolvencies for the period 1 July 2022 to 30 June 2023 show a sharp rise, in particular amongst small to medium size businesses. This did not let up, with company collapses surging 37 per cent in the last six months of 2023. Construction took up 28 per cent of that tally.

Construction industry insolvencies increased by over 75 per cent in the past 12 months as 2,349 companies went under. Rising interest rates, increasing material costs, delays in the supply of building materials and an ongoing shortage of workers all contributed.

At the same, time under-payment and non-payment of legal entitlements are on the rise, alongside the growth of sham contracting and phoenix companies. Workers are the big losers when bankruptcies occur as they lose wages, superannuation payments and other entitlements

In the case of construction companies, prospective homeowners lose their deposits, often their life savings, and workers lose their jobs.

Accommodation and food services had the next highest insolvencies at 15 per cent.

NOT SO BONZA

The fate of Bonza Airlines staff is uncertain. They were stood down without pay as the regional airline went into voluntary administration on 30 April. They have been told they will not be paid wages owed for the month of April.

At the end of May the Federal Court granted Bonza’s administrators a two-month extension to find a solution before being liquidated.

The workers are desperate with financial commitments and no income. If they find alternative full-time employment, they risk losing their entitlements if the company is sold and they continue their employment with it.

If the company goes into liquidation at the end of July or earlier, the workers will be entitled to the Fair Entitlements Guarantee (FEG) but that would not include their superannuation entitlements.

RECESSION

For ordinary Australians the economy is in recession. The government may point to an increase in the Gross Domestic Product (GDP), but this is not flowing on to the people.

The Australian Bureau of Statistics reports that GDP rose 0.2 per cent in the last 3 months of 2023. It was driven by government expenditure and private business investment. “Domestic demand continued to slow in the December quarter as households cut back on discretionary spending while investment slowed following three quarters of growth,” the ABS said.

The government has the responsibility to address the crisis by boosting the incomes of the lowest paid. JobSeeker, the Youth Allowance, pensions and other social security payments should be increased to well above the poverty line. No one in a country as rich as Australia should be living in poverty.

The hundreds of billions of dollars being handed over to the US and UK in the AUKUS war-making troika should be redirected to providing public services, including housing, for the Australian people and lifting social security payments. That would bring true security.

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