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Amy Remeikis
Inequality is growing – and stage three tax cuts will make it worse: thinktank
A new paper from the Australia Institute shows 93% of the benefits of economic growth between 2009 and 2019 went to the top 10%, while the bottom 90% received just 7%.
Senior economist with the think tank, Matt Grudnoff, said most Australians would feel “they are not getting ahead” since the global financial crisis in 2007-09.
“I think it is really a story about wages and profits,” he said. “Most of us – 90% – receive income from wages, which have gone backwards in real terms. But profits are doing very well and the ownership concentration on those profits is that 10% who are benefitting.”
The Australia Institute believes the stage-three tax cuts, legislated to begin from July next year, will make inequality even worse in Australia.
People earning more than $180,000 will see the greatest benefit, while low income earners will receive no benefit. The low- and middle-income tax offset which benefited most Australian workers ended in the last financial year – the Morrison government designed it to be temporary – whereas the third stage of the tax reform continues in perpetuity.
Grudnoff said inequality in Australia has been increasing, even before those stage-three tax cuts. His latest paper examined income per adult on a pre-tax basis, which means it shows how incomes are apportioned before the tax-and-transfer system kicks in to redistribute some income to lower income households via welfare and public services.
It analyses data from five business cycles over the past 70 years.
The first cycle, from 1950 to 1960, shows the bottom 90% of income recipients received the vast bulk of the benefits of economic growth. But by the final cycle, from 2009 to 2019, that phenomenon had reversed.
“Such an outcome has not been the norm over Australia’s post-war history. In all previous expansions, the bottom 90% received at least 50% of the economic growth, on a per adult basis,” the paper found.
Cait Kelly
Essential workers unable to afford to live alone
Soaring rents have made living alone impossible for most of the nation’s essential workers. New research shows some would have to spend about two-thirds of their income to afford a place on their own.
Comparing the average weekly unit rents against award wages for 15 essential jobs, the national housing campaign Everybody’s Home found there are virtually no regions of Australia where a single full-time essential worker, such as those in aged care, early childhood or nursing, could afford a to rent by themselves.
“So many essential industries are facing workforce shortages, with workers unable to afford to stay or move to parts of the country where these shortages are at their worst,” Everybody’s Home spokesperson Maiy Azize said.
For a worker in hospitality or meat-packing to meet the average capital city rent of $572 a week, they would have to spend 81% of their pay on housing; for an aged care worker it would be 77%.
Even those on higher pay, like teachers and firefighters, would have to spend 58% of their average pay on rent – well above the 30% threshold for rental stress to afford the average capital city rent.
“Our calculations suggest that essential workers in single households are likely to be in serious financial stress with little or no savings buffer, while workers in coupled households are likely to be financially dependent on a partner’s income,” the report said.
In the past three years, typical rents across the country have gone up more thsn $100 a week, hitting $489 in March, according to SQM Research. For essential workers, that means they’ve lost an average of six hours from their weekly income – an average of 37 days each year – on rent increases.
While the government has promised 20,000 social housing properties in five years, as part of its Housing Australia Future Fund, it will not match the scale of the crisis, Azize said.
“The federal government must start building 25,000 social homes every year to end our shortfall,” she said.
“That will help workers in severe rental stress, and free up affordable rentals for everyone else. The government can fund those social homes by winding back handouts for investors and landlords.”
Welcome
Good morning and welcome to our rolling news coverage. I’m Martin Farrer and I’ll be bringing you some of the top stories before my colleague takes the reins.
Our lead story this morning concerns the Australian army’s response to the Brereton inquiry into alleged war crimes. Guardian Australia has learned from a freedom of information request that the culture within the special forces will be reviewed regularly from now on. In addition, the defence force will update its policy on time away from the battlefield to ease stress.
Our data and business experts have teamed up with the research firm CoreLogic to track house prices in the wealthiest suburbs and we’ve found that values have fallen almost 25% in some areas, led by Mona Vale in Sydney’s north and Kew East in Melbourne. Check it all out here.
And we have another exclusive from our higher education reporter, Caitlin Cassidy, on the troubled state of Australia’s universities. A senior academic from a leading university tells her they are in crisis and have “completely lost their sense of direction”, with cost-cutting, casualisation and “ridiculous” teaching loads to blame.
Also in this morning’s news, the national housing campaign Everybody’s Home has found there are virtually no regions of Australia where a single full-time essential worker, such as those in aged care, early childhood or nursing, could afford a rental by themselves.
And a new paper from the Australia Institute shows 93% of the benefits of economic growth between 2009 and 2019 went to the top 10%, while the bottom 90% received just 7%. That’s because wages are going backwards in real terms, and it’s only the people who benefit from surging corporate profits who are getting ahead.
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