As the Australian economy begins its "recovery", economic and social indicators show the recession has disproportionately affected working people and the poor. The rich are just getting richer.
"Economic crises contain a paradox of recovery. As growth returns, the economic conditions facing many families will deteriorate", said Prime Minister Kevin Rudd in the July 25 Sydney Morning Herald. "Australians will feel continuing financial pressures and, in some areas, increased economic pain."
The "economic pain" is already being felt. The September 21 SMH said the number of home repossessions, of those who are unable to pay the mortgage, is growing. There have been 3260 repossessions in the first six months of the year in NSW alone, it said.
Employment falls
The Australian Bureau of Statistics (ABS) estimate of employment for August, released on September 10, showed that unemployment remained stable at 5.8%. However, over the same month, almost 30,800 full-time jobs were lost.
The "stable" unemployment figures were achieved only because thousands of people gave up looking for work entirely. Hours worked during August fell by 4 million, according to the ABS.
Bill Mitchell, director of the Centre of Full Employment and Equity at Newcastle University, told the September 12 Australian: "We are now starting to see hidden unemployment rise as people are dropping out of the workforce. The economy is only just hanging on by the skin of its teeth with strong fiscal support."
The ABS estimated underemployment at 13.6%. Mitchell puts the figure at 15%.
From September 20, pensioners will receive the long-awaited pension increase promised in the May federal budget. With an increase in the pension rate of $30 a week, a small indexation, and changes to allowances, pensioners will be up to $100 better off a fortnight.
Apart from a small indexation for cost of living increases, however, unemployed people (and single parents) will receive no increase in their benefit.
Rental squeeze
One impact of the federal government's doubling of the first home buyers' grant for the purchase of existing homes has been a tightening of the rental market, particularly in outer suburbs. Landlords are selling their properties to new home buyers at inflated prices.
Figures released in June by the Real Estate Institute of NSW show that, for suburbs more than 25 kilometres from the centre of Sydney, vacancies fell to only 1% in May. In Melbourne, rental vacancy rates fell below 1% for the first time on record, the March 20 Melbourne Age reported.
The September 22 Liverpool Leader reported that a family of five may be made homeless on account of their Ashcroft house being renovated. "They have already inspected and applied for 22 properties around the south and southwest and been rejected on 16 occasions", the paper said.
ABC TV's September 21 Four Corners focused on the plight of those made homeless in NSW, largely as a result of growing unemployment and underemployment. The program highlighted the massive shortage of public housing available, forcing many homeless families to live squashed into single rooms in motels.
Four Corners reported that the homeless are forced to apply for private rental accommodation, risking vicious exploitation at the hands of unscrupulous landlords. They are also forced to check out of the motel on a weekly basis and reapply to the housing department for an extension of their emergency accommodation.
Rich getting richer
At the other end of the spectrum, business executives are continuing to receive exorbitant salaries, despite official government disapproval. The September 22 SMH said: "Since 2001 executive base pay at Australia's top 100 listed companies has more than doubled and average bonuses have tripled."
During the 2008/09 financial year, payments to Qantas CEO Geoff Dixon totalled almost $11 million, "despite serving only five months as chief executive last year", the article said. Boral's former CEO Rod Pearse netted $11.5 million, the Commonwealth Bank's Ralph Norris $9.2 million and BHP Billiton's Marius Kloppers more than $10 million.
The response from the Rudd government — apart from parsimonious calls for restraint — is to offer capital an even greater share of the economy.
According to the September 19 SMH, the tax review being conducted by Treasury secretary Ken Henry will recommend company tax is cut. Currently at 30% (20% lower than the rate that prevailed before the election of the Hawke government in 1983), Henry is set to recommend that it be cut again, to around 25%.
Company tax receipts in the 2007/08 financial year topped $68 billion, according to the 2009 federal budget papers. Lowering the company tax rate to 25% would mean a loss of at least $7 billion to government coffers.
Rudd has already warned that the government will make cuts to services to repay the debt incurred by the two stimulus packages. Cutting company tax is likely to put even further pressure on government spending.
The government says that the recovery will be harsh — for working people. With further cuts to company taxes, cuts to government spending, higher interest rates and stagnating employment, the "recovery" looks set to be even worse than the recession.