The great wealth Australia has created over the least 14 years has generated employment and opportunity for many Australians. This success is something we should all be proud of and must strive to create for future generations. Unfortunately, though, our prosperity hasn’t reached all of our postcodes. Contrary to Howard Government rhetoric, a rising tide hasn’t lifted all boats.
A Patchwork Quilt of Winners and Losers
Recently released ABS figures show the Government’s $66 billion election spending spree has delivered a temporary income boost to low and middle income Australians who have otherwise fared poorly after almost a decade of Howard Government. Predictably, the PM and Treasurer have relied on these figures to support their spurious claims that workers and the poor are better off under the Coalition.
While it is true and welcome that some of the gains of 14 years of economic growth are starting to trickle down, and we have experienced strong employment growth, credible commentators point out that, for too many Australians under Mr Howard, it’s one step forward at election time and two steps back in the intervening years. The Bureau’s Income Distribution Survey indicated their survey figures were heavily influenced by lump sum payments offered by the Government in mid-2004, just before the election.
For example, it’s no coincidence that the incomes of the poorest leapt by an average of $26 a week in the same year that one-off lump sum payments equivalent to about $20 a week were paid. Indeed for the poorest five percent of income earners ninety percent of the total income gain since 1996 occurred in the year of the lump sum payments.
These lump-sum one-off election bribes included the June 2004 lump sum payments to families, Youth Allowance, Carer Allowance and Carer Payment recipients. For families the impact of these payments was greater because the panicked Government decided not to stipulate the lump sums be offset by family payment debts. And because the other one-off election year payments won’t be repeated in non-election years, the income gains at the bottom of the scale won’t be either.
It’s not just the poor who are doing it tough in John Howard’s Australia; it’s what I call the splintering middle too – those who are struggling under record household debt and meeting the ever-rising costs of fuel, food and health care. Like the prison guard in Blacktown, who told me he had to rotate his three kids through organised sport because he could afford the fees for only one at a time. There are many others like him.
This is a matter of shame. At a time of such stupendous wealth creation 2.4 million Australians are living below an austere poverty line of half average weekly earnings. There are over 1 million Australians in paid work who live below the poverty line – the working poor. Whether the half average weekly earnings definition is accepted or not, or whether it’s 1.5 million, what is indisputable is that our social fabric has become a patchwork quilt of winners and losers from economic change.
For this to happen in such prosperous times is a failure of social and economic policy. The truth is that the rich are getting much richer, the middle is splintering and – in non-election years – the poor are falling further behind. Yet the two big reforms of the post-election period are do not address these problems – heavily skewed tax cuts and an extreme and unfair industrial relations agenda. Rather they will strike at the heart of living standards and will widen the gap between rich and poor.
A Stronger, Fairer Economy
Australia needs a comprehensive economic strategy from its Government – one that creates wealth and ensures everyone has a stake in our prosperity. To do this we need a plan to modernise our infrastructure, invest in skills, education and innovation, and put some incentive back in the tax system. A strategy like this, and a combination of sensible, targeted investment and some genuine national leadership, is the only way to create wealth and lock in growth. It’s the only way to prepare Australia for any future downturn, and the only way to build the type of economy we want our kids to inherit.
We also need a concerted effort to ensure more people enjoy the national prosperity created by the hard work of Australians. In this context, we need a coordinated approach to fighting the poverty that’s concentrated in some of our postcodes. We need a smart and active government to help the poor, through community renewal projects and intelligent regional development strategies, localised jobs programs and place management approaches (not centralised, bureaucratic buck-passing) to tackle poverty.
Next we need genuine tax and welfare reform instead of the endless scapegoating of recipients and piecemeal handouts at election time. We need some real incentive back in a tax system that currently only discourages, with the twin goals of participation and productivity – empowering and encouraging people, where possible, to work or to work more. Labor’s priority in this area is tackling the crippling effective marginal tax rates that come into play with the interaction of the tax and transfer payments system, an urgent reform too long ignored by the Howard Government.
Another priority should be affordable higher education and schools funded on the basis of need; whether they are government, non-government, parish Christian or comprehensive. A real commitment to education – not lip service or tinkering at the edges – will bring inarguable economic and social benefits that far outweigh outlays. As will some fair dinkum investment in skills and other forms of human capital, with priority for apprenticeships and training in the postcodes of concentrated poverty and unemployment.
Australia’s skills crisis represents one of the greatest threats to national prosperity, but also a great opportunity to train and employ those caught in the welfare trap, or who are unemployed or underemployed. That’s why mapping skills shortage more effectively, and actively and promptly filling these holes, makes social and economic sense. We can do better when one in five young Australians are looking for a job at the same time as good careers go begging for want of skilled workers.
To combat poverty and inequality we’d also be better served by early intervention for children in poorer communities. A disadvantaged child can too easily become a disadvantaged adult if denied the environment to learn and develop and grow. We need a universal parenting scheme to teach parenting skills. This will have a positive impact on individual families, but also on the health and wellbeing of our entire community. The federal government must take responsibility for growing the range and reach of services for children, and for the provision of quality, affordable and accessible child-care.
We also need a supply-side strategy for affordable housing, and a renewed commitment to housing policy generally, as part of the effort to address the polarisation of incomes and opportunities in our community. The payment of rent assistance directly to landlords in return for agreements on low rent is worth a try. And a coordinated housing plan and innovative measures to get low income earners into their own homes would be an antidote to poverty and inequality that is too often ignored.
Australia’s Egalitarian Promise
A blindness of affluence prevents us from tackling the challenges outlined above. A lot of people who are doing very well simply don’t share any public spaces with the poor or the working poor. Once upon a time they may have run into them at the local school or mixed with them in the local street. That’s getting increasingly unlikely in modern society where those who are doing very well tend to mix largely with those that are doing very well, and we don’t tend to get that great mixing which once characterised our society. As a consequence, we find a lack of sympathy amongst many who determine the public priorities of this country for those who have been left behind, because simply they’re unaware of their plight or their circumstances.
It’s time to for us, collectively as a nation, to urgently reassert our fundamental belief in the Australian Way. To remember the egalitarian promise of our nation: a fair go all round. To harness our natural hope and optimism to become again a place where all Australians create and share in our national prosperity.