Archive for May, 2011

May 27, 2011

Who needs a pay rise?

Matt Groening aptly caricatured richest Australian Gina Rinehart as Mr Burns from The Simpsons in the November 24, 2010 Daily Telegraph

The richest person in Australia this year, according to the 2011 BRW Rich List, is mining magnate Gina Rinehart. Her wealth, estimated at $10.3 billion, is more than twice the wealth which gave shopping centre magnate Frank Lowy the top spot in last year’s BRW Rich List.

Rinehart’s wealth rose $5.55 billion from last year.

Adele Ferguson reported in the May 26 Sydney Morning Herald:

“The rich list shows Australia now has 35 billionaires, five more than last year. The cutoff point for the list is now $215 million, which is $30 million higher than last year… four of the country’s top-five richest people – Rinehart, Ivan Glasenberg, Andrew Forrest and Clive Palmer – have all made their money from the mining boom. Together they are worth more than $30 billion.”

Yet right now, big business representatives are urging Fair Work Australia to reject the ACTU’s modest call for $28 a week increase in the federal minimum wage. The bosses are crying poor. The Australian Chamber of Commerce wants no more than a $9.50 increase in the minimum wage.

The ACTU submission demonstrates that the 1.3 million workers who depend on the federal minimum wage are struggling with huge increases in cost of living. Over the last year, home rents have risen by an average 2.9% in capital cities, fuel 7.1%, food 8-13%, electricity 12.5% and water and sewerage bills 12.8%. Indeed the submission shows that $28 won’t even cover the median weekly rent increase on a small unit in Campbelltown in Sydney’s outer southwest.

This gross injustice is obvious but it is a chronic feature of our deeply class-divided society where the fruit of the labour of the great majority is systematically appropriated by a few.

The wealthiest 20% of Australians own 61% of the country’s wealth while the poorest 20% own 1% but few Australians are aware of this inequality according to a new study by Dr David Neale, Dr Mike Norton and Dr Dan Ariely, commissioned by the ACTU.

Source: Australian attitudes towards wealth inequality and the minimum wage (April 2011)

According to this report, most people estimate the wealth share of the richest 20% to be only about 40%, and they would like it to be less than 25%. Most people also think that poorest 20% share 9.5% of all wealth, when in fact they share only 1%. And the poorest 10% have net negative wealth (that is, they have more debts than assets).

A society built around such deep inequalities is not only unjust but is also unsustainable. The incredible amount of wealth concentrated in the hands of a handful of billionaires has meant that urgently needed investment in a transition to renewable and in social infrastructure such as public housing and public transport is not being made.  The facts show that Australia’s 35 billionaires are directing investment to maximise their profits and make themselves even richer instead of where it needs to be invested for the common good.

And worse, this distorted priority is determining not only the wealth that the 35 bilionaires own but also the savings of working people in superannuation funds (worth $1.28 trillion) and the investments of governments at all levels and other public institutions.

A recent gross example of this distortion was the recent revelation that the federal government’s $74 billion Future Fund had invested $135.4 million in nuclear weapons manufacturers. The Future Fund has previously been criticised for investing in cluster bomb manufacture and the tobacco industry.

If you agree with us that this system desperately needs changing, help us work for real change by making  a donation online today to the Green Left Weekly Fighting Fund.

Direct deposits can be made to Green Left Weekly, Commonwealth Bank, BSB 062-006, Account No. 00901992.

Otherwise, you can send a cheque or money order to PO Box 515, Broadway NSW 2007 or phone in a donation on the toll-free line, 1800 634 206 (within Australia).

May 25, 2011

The trickle down myth

Lessons from the US experience

Australian Labor PM Julia Gillard and treasurer Wayne Swan are trying hard to sell their version of the Great Australian Dream. It was summarised by Gillard in her Whitlam Oration speech (where she attacked the Greens as not “sharing the values of every day Australians”) and expounded in greater detail in the recent federal budget.

Basically, it hangs on a dream of a new long economic prosperity in Australia based on the new mining boom and more generally on the industrialisation of Asia. Australian minerals will command high prices and a growing middle class in Asia will keep paying big bucks their children to study in Australian universities, which are now increasingly run like degree factories.

So, they argue, if we help “our” capitalists make billions of dollars of profits, the benefit will trickle down through society and everyone will gain.

That’s the dream they are selling. It’s basic premise is not much different to that of the “Great American Dream” and countless other national adaptations of the same.

The above chart (which I got from this post on the The Pennsylvania Progressive website) on the distribution of the income gains from the extended period of economic growth in the US economy between the 1975 world economic crisis and the GFC explodes the “trickle down” myth in that country. It shows that the richest 10% took 100% of the income gain from this growth while 90% shared 0%!

Does anyone believe that things will operate radically different in capitalist Australia, a country where the richest 20% own 61% of all wealth?

Egalitarian Australia? Graph from ACTU report on Inequality & the Minimum Wage.

May 19, 2011

Wrong way Australia, turn back now!

Source: Australia’s Electricity Generation Mix 1960-2009, a report commissioned by Environment Victoria (May 2011)

Source: Environment Victoria report "Australia’s Electricity Generation Mix 1960-2009"

Our society is heading in the wrong direction. According to a new “Australia’s Electricity Generation Mix 1960-2009” report commissioned by Environment Victoria, the proportion of Australia’s electricity generated by renewable energy has declined from 19% in 1960 to 7% in 2008. As Australia today generates 10 times the amount of electricity as it did in 1960, coal-fired electricity generation has increased by 1200%.

The Gillard Labor government’s carbon tax/emissions trading scheme won’t reverse this increasing dependence on fossil fuels. Minister for mining company profits Martin Ferguson and numerous other Gillard ministers have made it clear that the real objective of this scheme will be to boost a greater shift to gas.

Gas-fired electricity has increased its  share from 1% in 1970 to 16% in 2008, according to the Environment Victoria report.  The Australian Bureau of Agricultural and Resource Economics, which projects gas to be the “fastest growing fossil fuel” in the next two decades, predicts that gas will more than double its share in electricity generation to 36.8% by 2029-30.

Source: ABARE "Australian Energy Resource Assessment" report (2009)

“For all of the hand-wringing about climate change over the past decade we’ve seen massive growth in emissions from coal generation while renewable energy has flat-lined”, said Mark Wakeham, Campaigns Director for Environment Victoria.

Our society in heading in a totally wrong direction. The profit-driven capitalists who make the decisions about what to invest in, with money that really isn’t theirs to gamble with, are investing in fossil fuels instead of renewable energy. If we leave this future shaping choice to the capitalists, they are going to invest (with the help of generous public subsidies) a further $240 billion in continuing this overwhelmingly fossil fuel-based energy industry, according to a report just released by Ferguson.

This is criminal, especially as Beyond Zero Emissions has produced a report that shows that it is entirely feasible to shift to 100% renewable stationary energy in just 10 years with a total investment of about $370 billion spaced out over that time. It makes sense. The capitalists’ choice keep us hooked on fossil fuels doesn’t – except to slake their profit-lust.

If you have had enough, it is time to invest in fighting for fundamental change through the Green Left Weekly Fighting Fund. You can make a donation online today.

Direct deposits can be made to Green Left Weekly, Commonwealth Bank, BSB 062-006, Account No. 00901992.

Otherwise, you can send a cheque or money order to PO Box 515, Broadway NSW 2007 or phone in a donation on the toll-free line, 1800 634 206 (within Australia).

May 13, 2011

Budget for billionaires

Business profits. Source: 2011-12 Australian Budget papers.

The mining and banking companies creaming billions in super profits from the Asian industrialisation-driven mining boom in Australia – the biggest ever mining boom in this country’s history – have done very well from the federal Budget delivered by the Gillard Labor government on May 10.

The big mining companies will continue to pay the lowest ever share in tax and royalties of the biggest ever profits ripped out of the ground in Australia. And on top of that, the Budget guarantees to supply skill labour (at the lowest possible cost) to the mining companies, to reduce these companies’ obligations to contribute to the training of skilled workers, and to subsidise, by billions of dollars, the building of transport infrastructure to get the minerals shipped out as fast and, as cheaply to the mining companies, as possible. Never mind the environmental and social society as a whole will have to bear.

As for tackling our biggest common challenge – climate change – the Budget does worse than nothing. It cuts $220 milllion from the token Solar Flagships program to promote renewable energy. Any serious climate change action hangs on the yet to be revealed carbon-tax/emission trading scheme to be announced later this year. But that too looks like it will do little for climate change – though it might help the billionaires who are setting up to make mega-profits from a gas boom.

The Australian Petroleum Production & Exploration Association (APPEA) Chief Executive, Belinda Robinson,  said the budget “shows the Government understands the importance of the resources sector to Australia’s continued prosperity”.

This is a government that is prepared to pull all stops out to guarantee that the billionaires who already profit the most from this mining boom will profit even more. The rest of the population, the great majority, will just have to hope to benefit a little from the alleged trickle down effect – or do worse.

Worse if you are an unemployed single parent, a person on the disability pension or an Aboriginal person trying to survive on a welfare payment because all these poorest sectors were delivered yet another dirty kick in this budget. The racist and patronising income management scheme introduced by the Howard Liberal government’s NT Intervention will be continued and extended to more Aboriginal communities.

Dr Cassandra Goldie, head of the Australian Council of Social Service, said that the  “get tough measures” on this poorest and most marginalised sections of the population are “unnecessary and will be counter-productive”.

Although at least two-thirds of children in single parent families on welfare live in poverty, the budget imposes a $56 per week cut in payments for some groups of single parents with teenage children and a $43 per week cut in payments for unemployed 21 year-olds, ACOSS added.

According to Professor Peter Whiteford of the Social Policy Research Centre at the University of New South Wales, years of welfare cutbacks in Australia, households which receive more than 90% of their income from government cash benefits has been reduced since the mid-1990s from 17% to 7.2%.

He also reveals that while the proportion of people with disabilities who are employed is 40% in Australia (compared to an OECD average of 44%), “the relative incomes of people with a disability are lower in Australia than in any other OECD country and poverty rates are the second highest”.

The attacks on single parents, the unemployed, people with disabilities and Aborigines appear are yet another appeal to right-wing populist prejudices fueled by reactionary radio “shockjocks”, other conservative media commentators and right-wing politicians. The amount of resources put into actually helping these layers find real jobs is much too small to really do the job.

Treasurer Wayne Swan made much of a $2.2 billion new investment in mental health but while this was welcomed by mental health advocate and 2010 Australian of the Year Dr Pat McGorry, he added that it was really only $1.5 billion in new investment and this “does not yet fully reflect the level of unmet need”.

Funding for more dental care, a promise made to the Greens and the independents in return for supporting the Gillard Labor minority  government, has not been delivered.

The Gillard government’s excuse is that funds are tight in this budget and some promises cannot be kept. And it is true that this budget has to deal with the hang over of the GFC and a string of major natural disasters. Some $16 billion (or more) had to be borrowed to bail out the capitalist system after its global greed-driven crisis point in 2008. But  now that the big companies (especially the mining companies and the banks) are once again raking in billions in super-profits why is it that the poorest and most needly – and our common environment – is being made to pay the cost of the bail out of the capitalist system?

Just imagine if this supposedly “Labor” government really acted in the interest of the majority and simply forced the mining companies to pay just 34% of their profits (the average paid by the industry in the first half of this decade before it declined to 14% in 2008-9)? This sector’s profits were estimated by Treasury just a year ago as “over $80 billion higher in 2008‐09 than in 1999‐00”. This is just a small measure of the potential public revenue lost because the government is soft on the big mining companies. Because mining profits are expected to soar much higher over the next few years, according to the Budget Papers.

Mining vs non-mining investment. Source: 2011 Budget Papers.

“Mining investment has risen from $12 billion in 2003‑04 to an estimated $56 billion in 2010‑11. This is a precursor to an even larger surge over coming years as a range of large resource projects ramp up, led by the LNG sector. Mining investment is expected to reach record highs as a share of GDP over the next two years.”

A government that served our common good – instead of that of the billionaire profiteers – would tax these super profits and invest it in a radical transition to renewable energy, in public transport and addressing other urgent social needs.

Further it would also not spend the $1.47 billion it has committed to imperial military interventions in other countries over the next four years and the even billions more in buying expensive new offensive military warplanes and warships.  Billions will still be wasted on killing, occupying and oppressing people in other lands despite the announced $2.4 billion in savings from “defence”. None of this money is for real defence and most of it is money allocated but not not spent because of delays in deliveries of major equipment from the giant arms manufacturing companies.

Predictably, the Liberal-National opposition offered no real alternative course in Opposition leader Tony Abbott’s budget reply. Abbott’s only valid point in this speech was to note the real cost of living pressures facing the majority of people in Australia:

“Since December 2007, the price of electricity is up 51%, gas is up 30%, and water is up 46%. Education costs have risen 24%, health 20% and rent 21%. Grocery prices are up 14%. Since the middle of 2009, interest rate rises have added $500 a month to mortgage repayments while wages have risen just 7%.”

However, Abbott offered no solution but to help the super rich get even richer and hope that some of their profits trickle down to ordinary folk.

Australia does have the resources to make the urgently needed investment in a just and sustainable future – but the overwhelming evidence is well and truly in that we cannot count on the major parties to make such an investment.