If you want a model of society that puts profits before people, Australia at the moment wouldn’t be a bad place to start. Matt Grudnoff, senior economist at the Australia Institute, last month described the recent slump in living standards as “Australia’s biggest real wage destruction since records began”. The Reserve Bank has said declines could continue, month after month, through the end of 2023. Yet the newly elected “Labour Party” barely lifts a finger to address it.
The federal government has asked the Fair Work Commission to raise the minimum wage to last year’s inflation rate of 5.1% because, it says, the PLA doesn’t want the poor backed down. It’s a sleight of hand. Workers have already been set back over the past twelve months by an average of $2,000, according to the Australian Council of Trade Unions. They will not be compensated for this.
The government’s demand for a 5.1% pay rise is for next year, presumably to keep people from rolling back. But Diana Mousina, senior AMP economist, says inflation could approach 7% in the coming months; and the RBA is now saying it could even exceed that figure by 2023. So 5.1% won’t be enough to prevent another one year of real wage cuts imposed on the lowest paid workers. And that’s assuming Fair Work grants even that paltry nominal wage increase.
All of the major employer associations’ submissions to the commission call for a substantially lower increase in the minimum wage. Why wouldn’t they? It’s a simple class war: transferring wealth from the workers to the capitalists. Every day that consumer price inflation is higher than wage growth is a day that bosses are making workers pay the cost of doing business.
Right now, there may not be any section of the workforce moving forward. As Eleanor Morley notes on page 4, the country’s 1.7 million civil servants are also crushed, many of them against the 1.5 or 2.5 per cent wage caps imposed by Labor governments. States.
Inflation is only a curse on workers if wages do not keep pace, but financiers consider high inflation to be evil simply because it is the process of devaluing money. And those with large amounts of cash, like banks, are disproportionately hit by higher inflation because their stores of wealth are shrinking faster than usual. This is the main reason the Reserve Bank has a “target” inflation rate of no more than 3% – to protect big finance.
Inflation also reduces the value of debts to banks. Their fundamental defense against this is the interest rate on the loans they give. Basically, banks compensate for rising inflation by squeezing more people who owe them money. In Australia, these are mostly workers and small business owners. The combined mortgage balance of the banks, for example, is nearly $3 trillion.
When the Reserve Bank Board of Directors, at its last two monthly meetings, voted to raise interest rates by 0.75%, it did so primarily, not to help deal with rising consumer prices, which are the result of international shocks, but to ensure that mortgage holders do not benefit, at the expense of the banks, from any fall in the real value of their debt.
The current cash rate is 0.85%, but it is expected to almost triple early next year. And the increases are being passed on to commercial banks, whose variable rates for homebuyers are now above 5%. The result is that mortgage payments are increasing by hundreds of dollars a month and likely translating into further increases in rents, which are up more than 9% from last year across the country, according to PropTrack, a company data analysis.
Again, it is the capitalists who find a way to make workers pay for the problems of the system.
The electricity crisis is now about to hit, even though Australia has some of the largest energy reserves in the world. Thousands of people have been hit with a doubling of their electricity bills. Millions more will be affected in the coming months as prices rise by hundreds of dollars per household per year.
It is not because the cost of generating electricity has suddenly increased. This is because virtually the entire energy grid, and the resources used to power it, have been privatized, linked to international markets and exploited for the benefit of big business.
As Josh Lees explores on page 10, gas exporters are reaping windfall profits due to global disruptions, while prices are passed on to consumers here, who in theory own the gas. It is a giant scam that enriches the fossil fuel capitalists at the expense of the standard of living of the working class.
The people who run the PLA aren’t stupid. They know that the government could do a number of things to prevent capitalists in various industries from driving down the standard of living of the working class. It could impose retail price caps and mortgage repayment caps. He could change labor laws to prevent pay cuts. This could secure energy resources and put the power grid back into public hands.
Doing any of these things would require a perspective that people should come before profits. This would require a fight against big business interests. But Labor is in the pocket of the capitalists. That is why it does almost nothing to stop this “class war from above”.
A response to the destruction of living standards must be organized from below, by workers, students and pensioners. If we don’t fight, we will keep losing.