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Wednesday, 31 July 2019
Page: 1684


Dr LEIGH (Fenner) (11:01): Yesterday a report came out from the Melbourne Institute: the annual HILDA statistical report. It ought to be a wake-up call for the Morrison government, which has been asleep at the wheel when it comes to tackling Australia's serious economic challenges. It showed that when the Liberals came to office under Tony Abbott in 2013, median household annual disposable income in Australia was $80,573. In the most recent year available in the report, 2017, median household income was $80,095. In other words, in the time that the Liberals have been in office, the median household has gotten poorer. So when Australians ask themselves, 'Am I better off or worse off under this government?', the answer is: after inflation, they're worse off.

We've seen significant falls in median household incomes, adjusting for household size, in Adelaide, in Perth, in regional Western Australia, in regional New South Wales and right here in the ACT. In the ACT, the drop in median equivalised household disposable incomes has been the largest of any region in Australia—11 per cent—a direct consequence of the decimation of the Public Service and the cuts in real wages for many Canberra public servants.

We've also seen troubling statistics about poverty and inequality. When the HILDA researchers looked at five-year income, a measure that economists refer to as permanent income, they saw a rise in inequality in that metric. As they point out:

… this is not a good development for people with low incomes, since they are more likely to have persistently low incomes.

The HILDA researchers looked, too, at poverty and found that relative poverty, as measured by the benchmark of the share of the population that is below 50 per cent of median, had increased to 10.4 per cent. The researchers noted that poverty is consistently high among the elderly, particularly elderly single persons. They noted:

… poverty is considerably more prevalent among children in single-parent families than among children in couple-parent families. In all years, the poverty rate for children in single-parent families is over twice the poverty rate for children in couple-parent families.

We are not doing a sufficiently good job of looking after children in single-parent families. The report also noted the collapse in male full-time employment, falling from 73 per cent a decade ago to some 68 per cent in the most recent year. These are troubling figures on the share of men who are holding down a full-time job. This is men aged 18 to 64, so it is particularly surprising that, for that cohort, full-time work is becoming rarer still.

We've had reports of people receiving Newstart skipping meals because they can't afford to eat; people chased over alleged robo-debts while government ministers who rack up internet bills in excess of $30,000 are able to simply repay them; and cuts to penalty rates while those opposite refer to penalty rates as a 'gift' to young people. Many of those receiving penalty rates would disagree. They would see penalty rates as being essential to paying the bills. We've had job hunters having their support payments suspended for alleged inappropriate behaviour, while government ministers are able to break marble tables in this place with little consequence.

We've had workers reporting outrageous levels of wage theft. What is the response from the Abbott-Turnbull-Morrison government? It's to go after workers' representatives, to bring bills into this place attacking unions, who have, in many cases, been the bodies that have called out wage theft. None of us in this place believe it's appropriate that workers are paid less than their legal entitlements, but some of us in this place are committed institutionally to trade unions—the organisations that didn't just bring us the eight-hour day and the weekend, didn't just campaign for sick pay, but are also responsible for raising pay and conditions. Unions campaign for workers' safety on dangerous sites, such as construction, and unions deliver a wage premium to their workers which is well in excess of the cost of union dues. As Senator Ayres said in a terrific first speech yesterday, there is a public good benefit in having trade unions. So it's particularly surprising that, with trade union membership lower than it has been in a century, the approach from those opposite is, again, to bring anti-worker laws into this place.

Let's be clear what it means when you reduce unionisation in Australia. That means we see more inequality, a higher gender pay gap, a higher pay gap between Indigenous and non-Indigenous Australians and more wage theft. Those are the direct consequences of having fewer union members in Australia.

We've seen across the Chamber calls from members of the coalition to cut away superannuation, to have superannuation not apply to low-income Australians. That's Senator Bragg's suggestion, but there is a backbench ginger group pushing hard on the Treasurer to delay the increase in compulsory superannuation. It's so ironic that people elected to this place, with their 15 per cent superannuation, think that 12 per cent is too good for low-income Australians. Rather than trying to undermine universal superannuation, it would be terrific if those opposite would support superannuation and support the best performing sector of the superannuation industry—the sector set up by industry funds. Industry funds aren't union funds; they're set up as a compact between unions and employers. Anyone who is serious about increasing retirement adequacy for Australians ought to support the sector, which has consistently had lower fees and higher returns than its retail counterpart. Yet the government's sole focus seems to be on fighting the old battles between industry and retail funds rather than focusing on the new agenda of reducing costs within the system, as the Grattan Institute has called for.

Under this government, we've seen an economy which is now in the third quarter of a per capita recession, where retail sales are in the doldrums, where new car sales are going backward, where engineering construction is down, where unemployment is a full percentage point higher than it is in Britain, New Zealand, the United States or Germany. We've got an economy in which wage growth isn't delivering, in which productivity growth has been lacklustre. As I argued in a piece in Inside Story this week, productivity growth is, according the Productivity Commission, 'mediocre', running at some one-tenth of the level that it has been running at on a historical average. But without the investments in individuals, institutions and infrastructure, we won't get the turnaround in productivity growth that the nation so sorely demands. And even given that lacklustre level of productivity growth, we've still seen a decoupling of productivity and wage growth. We've still seen workers not getting their fair share of the gains.

That matters from an inequality standpoint and a fairness standpoint. Workers shouldn't be seeing this continual decline in the labour share. But it matters, too, in terms of the incentives to invest in productivity-boosting investments. Why should workers be a part of productivity-boosting gains in the workplace if they're not going to share in that productivity growth through their pay packets? It would be like saying to employers that they were not to get any of the productivity growth through the profit share but were nonetheless expected to invest in productivity-boosting investments. That wouldn't be reasonable either.

In the 1970s we had a real wage overhang. We now have a real wage underhang, with the real wage sitting stubbornly below productivity growth. We have poverty which is, in Australia, too high. One of my mentors was Tony Atkinson, whose last book, Measuring Poverty Around the World, has been published posthumously, put together by John Micklewright and Andrea Brandolini, and with afterwords from Nicholas Stern and Francois Bourguignon. This is a really important contribution from one of the world's great thinkers about inequality, who was, sadly, taken from us too soon. In his opening, Tony Atkinson asks the rhetorical question, 'Why did I write this book and why should you read it?' He answers:

I became an economist in the 1960s on account of reading The Poor and the Poorest, a landmark study of poverty in the United Kingdom by Brian Abel-Smith and Peter Townsend … and of my earlier personal experience of working with deprived children in Hamburg. My first book (Atkinson 1969) was about poverty in Britain and the need for urgent action. Some half a century later, I remain deeply concerned that, in countries that are many times richer than in the 1960s, poverty has become more, rather than less, entrenched.

He goes on to say that his intention is to shine a light onto the issue of poverty, recalling the importance of John F Kennedy's campaigning in the Appalachian region of West Virginia, of Lyndon B Johnson's unconditional war on poverty, of the Millennium Development Goals and the Sustainable Development Goals, which have catalysed action at an international level on poverty and disadvantage. Key works on inequality, including Thomas Piketty's Capital in the Twenty-First Century and Martin Ravallion's The Economics of Poverty have focused the attention of the economics profession on tackling poverty and disadvantage, recognising that we need crisp measures that can sum up the challenge to a lay audience: the share of the population living on less than $2 a day, and the share of incomes going to the top one per cent or top 0.1 per cent.

It's vital that we understand that poverty and climate change are intertwined. As Nicholas Stern notes in his afterword:

… it is the poorest who are most vulnerable and who suffer the greatest impacts. Tony recognised very clearly the double inequality here. The poorest of the world, wherever they are, have contributed least to the causes of climate change, but they suffer the most.

He goes on to say:

… the transition to the low-carbon economy offers us an alternative and dynamic growth agenda. Developing relevant new growth models in theory and practice is a key and urgent task for economic theorists, applied economists and economic decision-makers, in both the public and private sectors.

There is an optimistic story to be told here, one in which we decarbonise the economy and create many more jobs in the renewables energy sector, and ensure that those jobs are well paying, sustainable and inclusive. As Nicholas Stern notes:

Strong, sustainable, and inclusive, it is the only lasting growth story on offer …

So we need to do more on tackling climate change but, unfortunately, this government has its head in the sand. It has an energy minister who refuses to acknowledge, in question time, that Australian emissions have been rising under this government and that the government has no plan for ensuring that Australia meets our internationally agreed targets, which were settled in Paris for a very good reason. Countries came to the Paris climate meetings saying what they would do to keep climate change below the two-degree target. This is our contribution to a policy agenda which would save the Great Barrier Reef and ensure that we don't see a massive increase in catastrophic climate events caused by unchecked climate change. Despite the huge tourism gains from the Great Barrier Reef, despite the risks to the economy of unchecked climate change, the government seems unwilling to do its part. The cost isn't just rising emissions; it's rising energy prices, which have gone up markedly under this government, as my colleague the shadow minister for energy and the environment has noted.

I'd urge those opposite to engage with some of these critical issues around poverty and disadvantage. They can increase Newstart. It's not too late for them to do a backflip on Newstart. Just as Tony Abbott dropped his $7 GP co-payment, just as Malcolm Turnbull backflipped on same-sex marriage, so too Prime Minister Morrison can do the right thing and increase Newstart to decrease poverty in Australia.