Families feeling the squeeze — between bills that keep going up and incomes that don’t — are not imagining it. The Australia Bureau of Statistics has released figures showing family incomes in steady decline.
The bizarre thing is that this is happening while corporations are generating record profits, top end salaries are at all-time highs, Treasurer Scott Morrison is bragging about national income and the whole world is in a strong upswing in trade, jobs and economic growth. “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 ordinary Australians. The ABS measures this quarterly in series 5232.0, “Australian National Accounts: Finance and Wealth”. Since record keeping began, the amount that families have been free to spend has increased steadily nearly every year. This is the one variable almost completely resistant to droughts, floods, recessions, changes of government, jobless rises and falls, and housing booms and busts.
In the last 30 years, there have only been six 12-month periods when money available to spend has declined compared with the previous year. Four have been since the 2013 election.
What the data shows us
Disposable income in the four quarters to December 2015 fell below the total for the four quarters to December 2014. That was only the third time on record that this had happened. The first was in 2002 during the early 2000s recession. The second was in 2009 at the depths of the global financial crisis. Incomes rebounded swiftly both times.
But following that curious negative year to December 2015 — when the world was in strong recovery from the GFC — there was another, in the year to September 2016. And then two negative years in a row: to June 2017 and to September 2017. The latest result, a positive growth of 0.93% to March 2018 is a welcome return to the black. But it is the 10th consecutive quarter with the increase either negative or positive but below 1%. The longest streak before this was just two consecutive quarters below 1%. This occurred once during the GFC and once during the early 2000s recession. Not at any other time.
Income per household
For the nation overall, income fell in the March quarter to $289.8 billion. That follows a hefty fall the quarter before, down from $306.7 to $302.2 billion. Hence, the decline over six months was $16.9 billion.
More useful figures emerge, however, when we match national income against the number of households.
Using ABS household data, disposable income is now just $30,267 per household per year. That is below the $30,805 at the September 2013 election. It is well down from $32,344 six months ago, when things appeared, deceptively, to be improving. Allowing for inflation — stuck at 1.9% — households are much worse off than during the Labor years.
Total national savings
According to the latest ABS release, savings for the whole nation for the March quarter was a modest $18.8 billion. That is well below the $26.1 billion at the time of the 2013 election, and not much better than half the peak of $33.1 billion back in 2011.
Household savings
Net savings by households decreased for the fourth consecutive quarter to a disastrous $5.5 billion, the lowest level since March 2008. This is close to one-third of the level at the 2013 election — $15.6 billion — and just over a quarter of the 2011 peak of $20.4 billion.
How has this happened?
Clearly, virtually all the impressive increase in the nation’s income since the Coalition came to office has gone to the big corporations or high income individuals or offshore rather than being shared with families.
Intentional or not, this has been the outcome of changes to wages policy, tax collections, welfare and economic management overall.
But are people surprised?
I would have thought anyone with the mildest interest in politics would have seen that the lower and middle income families hardly rate a blip on the LNP Government’s radar. It seems everything they have done has benefited those on high incomes and this is a deliberate choice.
Capturing power and revenue streams is more important than contributing to the welfare of the nation and the planet. Such is the philosophy of the global marketplace and over the centuries such philosophies have led to revolution and war.
Can Australian society transition from rule by the powerful and greedy to rule based on social well-being and merit without conflict?
I’ll take a stab – NO.
“Vote for the Limited News Party – We’re Here to Help (Corporate Oz)”
I’m intrigued by this “reasoning” of the equity of these “electronically tested” tax cuts – in lieu of a wage rise, while the company worked for continues making unshared (with it’s workers) profits?
That “the harder you aspire and work the more you earn” – from politicians and on-side “economists”?
Like we could all work in politics (like the way they work)? Or as executives, who don’t have to worry about “productivity” for a pay rise – “Pass the tax cut, snort!”?
That tax cuts for those on $45,000 are somehow in tune with those on $198,000?
I reckon that a family of four on $45,000 would be a lot more worried about dentists and doctors bills; the kid’s education fees, aged care for older relatives, power bills and the like while contemplating what to do with that tax cut?
I reckon that if my family “had to live” $198,000/year I’d be a lot less concerned about such things while I contemplated what I’d do with my tax cut? ….. Maybe ‘where to spend the Xmas hols this year’? Aspen? Sapporo? The Alps? A new car?
But with an “interest-only” loan period coming to an end, “real estate investments” might be something to worry about – for a start I might have the odd few.
“Tax Cuts” for those on less than $45,000 are actually nothing like those on over $198,000. The latter takes effect *immediately*, the former is an increase in the offset…..which can only be claimed as a part of a tax rebate at the end of the 2018-19 financial year.
Then there’s all those “working poor” on less than $30,000 let alone 40 grand.
All this low wages growth and increasing cost of living blah, blah, is of no consequence or worry to Malfeasance Turnbull or Scoundrel Morrison. These charlatans know that with a few snappy slogans, empty promises and support from the Murdoch NewsCrap and Foxtail organisations it is very likely the Australian hard working voting sheeples will vote for them once again. Hard working Australian voting sheeples are well known and seem to enjoy voting for those who work hard at doing as little as possible for the well being of same said hard working Australian sheeples. That is a fact it would appear from the last election given the rogering the rAbbott Government gave the working sheeples.
Awaiting slogans: Beel Shortin bad, da Labor Party bad, da Unions bad, Union thugs. Jobs and growth, growth and jobs, wimmen almost good. IPA good, Rupert Murdoch, NewsCrap and Foxtail good.
Bill…it never ceases to amaze me how those on the bottom rungs of the economic ladder keep voting against their own best interests!
Also…thanks again to Alan, who always gives us the truth…backed up with all the facts.
If Crikey, in these (apparently) straitened times, has to stage a Hunger Games between BK & AA, my vote is for the latter.