Did you know that the Reserve Bank of Australia (RBA) sets the optimum level of unemployment at around 5%? Are you one of the unlucky 500 000 in Australia? These individuals have, over the last 50 years, been surplus to economic requirements for the Australian economy. The inflation fighting remit of the RBA operates on the understanding that a pool of excess workers is required to put downward pressure on wage growth in this country. Economists since the 1970s have operated on the basis that a wage-price-spiral is the fundamental cause of inflation in this nation and globally.
Australia Runs Its Economy With A Fixed Unemployed Target of 5%
This economic monetary setting can be seen at the moment with the RBA rapidly raising interest rates – there have been 10 rises on the trot – to quell the current high inflation rate in Australia. The unemployment rate in Australia is at a record low of 3.5% due to the effects of the global pandemic and the exodus of international casual workers from our economy. Wage growth in Australia has stagnated over the last 20 years for a variety of reasons. The automation of many sectors via high tech solutions has seen the loss of many jobs. The de-unionisation of Australia has seen the power of workers disappear in wage negotiations. Corporations have more sway through monopsony, which is a greater concentration of jobs in fewer companies and regions. The current high inflationary period was initially caused by supply-side shocks during the pandemic.
The Australia Institute has identified corporate price gouging in response to the inflationary climate, which has created a profit-price-spiral fuelling high inflation.
The RBA continues to operate under its old thinking about inflation with repeated warnings about the dangers of higher wages to the Australian economy.
Punishing The Unemployed Economically Is Australian Government Policy
Despite these fixed monetary settings in the Australian economy, successive governments have run welfare policies designed to economically punish the unemployed. The basic rate of the dole in Australia is so far below the poverty line it is universally regarded as abysmal. This is the stick with which to beat the unemployed into taking any job they can get. However, the Australian economy does not support full employment because this would put upward pressure on the wage growth rate, something the RBA does not want. This means there are not the jobs out there for these 500 000 unemployed to get. The narrative in Australia has always been that those on the dole are shirkers and welfare cheats. Political parties support this false narrative for a variety of reasons. The Coalition, in particular, see the value in demonising a powerless section of the community. The Robodebt scheme was a keen example of this. Ministers like Scott Morrison and Alan Tudge positioned themselves as ‘welfare cops’ righteously prosecuting the villains in the Australian economy. The fact that this whole obscene farrago was built on a pack of lies cost vulnerable Australians their lives and reputations.
Ultimately, it cost us, the taxpayers, $1.8 billion, following a settled class action against the government.
Governments and political parties like to have sections of society that can be hated, it is like a pressure release valve where middle class frustrations can be vented on those not associated with the government of the day. The Nazis had the Jews.
The Albanese government has been in office for around a year and it has done some good things. Ten years of Coalition government left us with little or nothing done to combat climate change. The rich got richer and the poor more widespread under Morrison, Turnbull, and Abbott. Stage 3 tax cuts for the wealthiest section of our society hang over our economy like the sword of Damocles. $254 billion over 10 years for the most privileged within our economy. $368 billion for AUKUS submarines – another Morrison left over policy to pay for going forward. The Albanese government is walking on egg shells it seems. The halving of generous tax breaks to those with more than $3 million in their superannuation fund was a step in the right direction but it is time to stop being so tentative in government. It is time to realise who is in government and to act decisively.
“Expenditure on payments for job-seekers (including Newstart Allowance and Youth Allowance (Other)) will increase slightly from $11.1 billion in 2017–18 to $11.9 billion in 2021–22.”
- (Budget Review, 2018-19)
Newstart and the youth allowance cost some $11.9 billion a year to the Australian economy. The AUKUS submarines will cost around $10 billion a year over 35 years and this will go up exponentially if past defence procurements are anything to go by. The stage 3 tax cuts will cost the Australian economy more than $25 billion a year. Paul Keating pointed out that these submarines will not be a silver bullet when it comes to defending Australia from invasion. Perhaps, these nuclear powered subs will be an expensive symbolic deterrent. China fears are being beat up by Peter Hartcher at Nine Fairfax with inflammatory front page features on the SMH and Age promising imminent war with China, according to a select group of experts funded by the industrial military complex. Australia’s ingrained fear of the yellow peril happily sees their government spend vast amounts of money going to the Americans and British to peg back the influence of China on the world stage. White people do not feel comfortable with Asiatics wielding power, despite the size and economic might of China.
Peter Hartcher bangs on about China’s poor record on human rights, but he is strangely quieter on things like Aboriginal deaths in custody over the last 30 years.
Are you one of the unlucky 500 000 in Australia? A couple of generations of Australians have been left on the economic scrap heap by the RBA and Australian governments. Their economic settings have consigned 5% of the working age population to poverty and poor outcomes in their lives. Combine this with economic policies designed to benefit the wealthy at the expense of the poor and you get systematic forces undermining the bottom half of the population. A profit-price-spiral is fuelling an inflation rate of 7.8%, with corporations recording record half yearly profits. The RBA is not interested in this, they are bankers, and for them high company profits are always a good thing. The poorest people in Australia will pay for the excesses of corporate Australia by being beaten up via a recession. Philip Lowe, who earns in excess of a million dollars a year, is terribly sorry for the pain that those who can least afford it are experiencing.
Qantas records $1.6 billion half yearly profit on the back of high ticket prices and massive worker layoffs.
Commonwealth Bank of Australia records $5.1 billion half yearly profit on the back of severe interest rate rises.
Gas oligopolies make disgusting levels of profit via market reaction to war in Ukraine.
Oil companies make record profits, like Ampol up 30% on last reporting period.
Woolworths profits up 25%
Australian consumers paying through the nose with rents across the country at record highs.
The unemployment rate will soon rise, as the RBA’s economic settings seek to tip our economy into a recession. Have you ever wondered whether money is viewed as being more important than people by the institutions in Australia? Well, here is proof, the currency is viewed as much more important than your economic pain, than your life and death issues. Philip Lowe is the walking talking illustration of that truth. These are the economic settings that rule our lives.
Robert Sudha Hamilton
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