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Jan 16, 2013

Dole around the world: how does Australia stack up?

With the latest unemployment rate due to be announced tomorrow, a quick look around the world shows that Australia is not a terrible place to be unemployed, writes freelance journalist Sally Whyte.

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Pressure is mounting on the federal government to hike Newstart payments to the unemployed. But an analysis of the unemployment benefits around the world shows Australia isn’t necessarily a terrible place to be out of work.

A single person in Australia who is “looking for paid work” (Centrelink’s euphemistic term for unemployment) is entitled to up to $492.60 a fortnight and could also qualify for $121 in rent assistance a fortnight.

Even the full Newstart allowance combined with rent assistance is $167.40 a week below the poverty line, which is updated quarterly by the Melbourne Institute of Applied Economic and Social Research. The most recent calculation of the Australian poverty line in October sets the minimum income at $474.20 per week including housing costs.

Australia is one of few countries where a person can remain on the dole indefinitely. Across the ditch in New Zealand the unemployed have to reapply after receiving the unemployment benefit for 12 months. A single person in New Zealand receives NZ$229.01 (A$182.74) weekly, A$127.12 less a fortnight than a job seeker on this side of the Tasman.

Australia is also one of few countries among its peers that does not charge a specific tax to employees or employers to fund unemployment benefits. In the UK, Canada, Germany and the US, employees pay to be “insured” against unemployment.

In the UK, employees pay on average 12% of their income as part of their National Insurance Contribution to be entitled to state benefits. The UK’s Jobseeker Allowance is £71 (A$108.13) weekly — significantly less than Australia’s dole, but housing benefits in the UK are more generous. Rates of housing assistance are calculated depending on location and the living status of a person, but the maximum amount for a single person is 250 pounds (A$380.74) per week.

The Canadian Employment Insurance program is not funded by the government but by premiums paid by employees and employers. In a complicated system, Canadians are only entitled to the dole if they have paid the 1.83% tax when they were employed. Their benefit is calculated at 55% of a person’s average insurable income up to C$47,400, meaning an unemployed person could receive up to C$501 (A$481.88) weekly. The period of time that a person can spend receiving the payment depends on the rate of unemployment in their province.

Unemployed Germans have access to €374 (A$473.31) monthly, only if they have previously contributed to the employment insurance scheme. This is almost half the Australian benefit, but the costs of accommodation and heating (it is Germany after all) can be paid in full “if they are reasonable“.

Although jumping through hoops at Centrelink is notoriously time-consuming and confusing, it is nothing compared to the rabbit warren of payments, taxes and food stamps in the United States. The maximum amount paid weekly changes from state to state, from US$247 (A$233) in Louisiana to a possible US$979 (A$926.47) in Massachusetts. It is unclear how many of America’s unemployed receive the full benefits in their home state as rates of payment are calculated by a person’s previous wages and employment.

In most states unemployment insurance can be claimed for a maximum of 26 weeks. Not only does the dole payment fluctuate across borders, but the taxes paid to the system and the eligibility rules to receive a payment are also state based.

The $50 a week rise in Newstart proposed by the Greens would cost the government $7.4 billion between now and 2016-17 and would leave the unemployed on the payment around $100 below the poverty line. The prospect of living on $35 a day is daunting, but perhaps not as daunting as $26 a day in New Zealand or $15 a day in Canada and Germany …

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268 comments

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268 thoughts on “Dole around the world: how does Australia stack up?

  1. Jimmy

    I know this thread has been dead for a while but this article does make a bit of a mockery of the “cost of living” pressures we apparently are facing today.

    http://www.theaustralian.com.au/news/breaking-news/cost-of-living-not-so-bad-apparently/story-fn3dxiwe-1226566821043

  2. Jimmy

    Dr Smithy – Very disappointing, just because your argument doesn’t stack up doesn’t mean you shouldn’t at least acknowledge it.

  3. Jimmy

    CML I would love to see this discussed by an economics experts, but you know what they say, if you talk to two economists you get three opinions.

    Dr Smithy Where are you? I hope the inconvenient facts haven’t scared you off!

  4. CML

    I keep on reading some of the posts on this article. All very interesting. Perhaps Crikey could get an ecomonics expert to look at this blog and tell us who is correct – Jimmy or drsmithy?? And all the others agreeing and disagreeing with these two, of course!
    By the way, Crikey, is this a record for comments (265) and length of discussion time (1 week) for any one story?

  5. Jimmy

    I’m starting to worried Dr Smithy – surely you have something to say about the whole deline in wages theory being based around an unusual spike due to the stagnation of the economy in the 70s?

  6. Jimmy

    Dr Smithy – This is from the ABS website “The Long Boom had ended by the early 1970s. Australia’s economy stagnated with unemployment and inflation climbing dramatically” So there you have it “wages share of total factor income” rose dramatically and “profit share of total factor income” plummeted because the Australian economy completely stagnated.

    Other than that period “wages share of total factor income” has been fairly constant and “profit share of total factor income” has had pretty much “linear growth” – so are you advocating for the stagnation of the Australian economy with high inflation and unemployment?

    I would really love to hear your assessment of this!!!

  7. Jimmy

    DR SMithy – I am going to post a graph below of “Wages Share of Total factor income” It only goes to 2008 (but given Profit share of total factor income has declined in recent years I don’t think the last 2 years will show too much difference) and you’ll never guess what it shows,in 2007/08 wages share was 53.4% which is roughly equivalent to the late 60’s early 70’s. In fact it is only the mid 70’s massive increase (the reason for this would be great to know) to a high of 63.4% that makes a decline appear.

    So I’d have to ask has the decline in wages you talk about even exist?

  8. Jimmy

    Dr Smithy – “Capital’s share has been growing basically linearly since the late ’70s.” How about you find a time when capitals share hasn’t been growing? At what point in our history was wages & capital growth both increasing at the same rate as GDP and then we can have a look at what policies were in place to achieve this feat.

    Assuming I am looking at the same graph that you are referring to “Capital’s share has been growing basically linearly since” the point at which the graph starts (early 60s) except for a dramatic drop in what look to be the early to mid Seventies which seems to be unusual occurence.

    This to me seems to suggest that capitals share increasing is more of a natural state than the result of a perceived shift to the right in govt policies and therefore the best govt can do is ensure that there is real wages growth so that the actual size of the slice of pie continues to grow even if it proportionally smaller than the growth of the actual pie.

  9. Jimmy

    “Capital’s share has been growing basically linearly since the late ’70s.” This is another example of same result different cause – The sevnties and 80 had very high union membership (I think it was about 43% in 1986) but we see very low wages growth and capitals share increased

    Mow we have lower Union membership and good real wages growth but capitals share is still increasing.

    Are the causes the same? Which situation is better?

  10. Jimmy

    “Capital’s share has been growing basically linearly since the late ’70s.” SO what you are saying is that when you said the system was better 30 years ago you were wrong, we have to back 40 years?

    “None of that justifies wages share dropping. The first phase should drive up both wages and capital proportionally equally, the second should see capital share decreasing, and the third should see both moving roughly together.” No that isn’t right, the first phase see’s the hoarding of profit so that they have the capacity to mover into the second phase, and the third phase see’s continued slower wages growth while the lower prices sees lower actual growth.

    nd you still haven’t discussed the causes in any detail, for example the decline in Unionisation, Australias current rate is around 20%, which is roughly what Americas was in 1983, Americas is around 12%. What is causing this? In Australia there is a dramatic fall in young people being union members why? Is it because they will lose their job if they join the union or is it because they get the benefits of a union negotiated award if they are in a union or not or is it because the type of jobs they are doing is different to 40 years ago or is it because the unions aren’t selling the benefits of membership?

    How does this compare with the situation in the US?

    And again if you want wages to grow with GDP do you accept they should fall in a recession?

  11. Jimmy

    Dr Smithy – Here is a chart of GDP Growth for the last 20 years (I couldn’t find anything that goes back to 1985) but looking at it where do you think the gap grew the most, pre 1995 when wages growth was 0.3%pa o 1996-2006 when real wages growth was 20% or between 2006 and 2012 then real wages grew 10%

  12. drsmithy

    They are, […]

    According to the graph here (Profit share of Total Factor Income):

    http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5204.0Main%20Features22011-12?opendocument&tabname=Summary&prodno=5204.0&issue=2011-12&num=&view

    Capital’s share has been growing basically linearly since the late ’70s.

    […] this mining boom has 3 phases, the first phase was a massive increase in prices, the second (which we are currently experiencing is the massive increase in investment, and the third will be a massive increase in production, during this third phase prices will come down and wages will increase proportionally.

    None of that justifies wages share dropping. The first phase should drive up both wages and capital proportionally equally, the second should see capital share decreasing, and the third should see both moving roughly together.

  13. Jimmy

    Dr Smithy – I should just clarify a point I made in a post that is currently in moderation;

    “So why isn’t capital share “volatile” as well?” They are, this mining boom has 3 phases, the first phase was a massive increase in prices, the second (which we are currently experiencing is the massive increase in investment, and the third will be a massive increase in production, during this third phase prices will come down and wages will increase proportionally.

  14. Jimmy

    ” I have stated that wages as a proportion of GDP are decreasing and concurrently, that capital share of GDP is increasing much faster.” OK tell me what changes have lead to that.

    “Decreasing GDP share of wages, (faster) increasing share of capital.
    Increasing wage and wealth gaps
    Decreasing class mobility
    Increasing GINI coefficient
    Reduction in quality and availability of public services and/or privatisation of public services and property Reductions in workers rights Reduction in unionism rates Corporate influence in Government (mining tax being the prime example, but the numerous policies and handouts dedicated to maintaining the real estate bubble are another)” These are vague assertions I want details. And You still haven’t said how our GINI ranking sits with the rest of the world. And “Decreasing class mobility” Why? Education is the best way to increase class mobility and you can still get a tertiary education without paying anything until you earn $47k.

    “Couldn’t tell you off the top of my head, my accountant did my taxes when I was living there. Maybe you could expand on why you think it’s important.” So give me a rough idea, are we talking $20k in automatic deductions? And why is it important – as I said there is more to wealth distribution than just wages increases, it is how much of that wage do you get to keep?

    “Pretty sure they’ve dumped $1T+ into the economy over the last few years and it’s done diddly squat for employment” Really maybe you could explain why unemployment has dropped over from around 10% in 2009 to less than 8% now?

    “Nope.” Well demonstrate how lending practices in Australia were the same as the US, you could alos discuss tax deductibility of home loans.

    “Median income Timboon: about $48k
    Median income Melbourne: about $69k
    Are you seriously going to try and argue the long term employment and career prospects are better in Timboon than Melbourne?” Median House price in Timboon $210k (at worst $235k), Median House price in Meblourne $575k, the wage decrease isn’t comensurate as you suggest. And how long is the average commute in Melbourne? If you lived in Timboon and drove 40 minutes there are half a dozen Towns and a city. Plus your long term prospects depend on your job, if you are a teacher, nurse or Tradie,Retail assistant etc your long term prospects are about the same, if you are a Vet your long term prospects are better, if you are an investment banker your prospects are worse.

    “This is a l i e.” See above you have argued that the reduction in wgaes is comensurate with the reduction in house prices, clearly it isn’t.

    “This is a l i e (and it’s comparing two different things – wages vs wages growth).” SO would you prefer a big slice of a small pie or a smaller slice of a much bigger pie? And would you prefer your wage to be growing considerably faster than inflation or at inflation? And if you want your wage to grow at GDP, would you accept your wage shrinking during a recession?

    “This is mostly irrelevant” No it isn’t, you are arguing we are going down the same path as the US, the different IR policies make us following them unlikely. For example look at how the minimum wage is set.

    “You haven’t made a point yet. All you’ve done is insist Australia is awesome because America is bad.” And all you have done is say we are bad with no thought of why or how we can fix it and ignored anything that doesn’t suit your view.

    “For example ?” – I crasehed my car, it could of been because I wasn’t concentrating, it could of been because I was speeding, it could of been becauuse I was drunk but the end result was my car is crashed.

    “So why isn’t capital share “volatile” as well ?” It is, currently it is going through a boom, as returns diminish wages will grow proportionally larger.

    “Indeed. Now, what has been the trend of these things in Australia over the last thirty years ?” That is what I have been asking you, the only trend presented so far is an increase in real wages growth.

    “However, if taxes are dropping and take-home wages increasing, this implies the wages share should be increasing, not decreasing or remaining steady.” Are you sure the wage share is being calculated on take home pay?

    “Why do you believe GDP growth is driven by wages growth?” I am not saying that, you want our policies to return to those of 30 years ago, well thirty years ago real wage growth was 0.3%, so unless GDP growth was 0.3% as well the gap between wages growth and GDP growth was larger then than it is now, ie things have improved in the last 20 years after going backwards from 30 years ago to 20 years ago.

    “Taxes in the USA are even lower than Australia. As Mitt Romney noted, some 47% of American’s don’t pay any tax at all ” Can you put some figures around that statement and can you show how the US and Australia have changed in the last 30 years.

  15. Jimmy

    Ian, I’m not exactly flying, I have kids under 4 and my household income would be around $80k, but I live within my means, I bought a house I could afford, not the house of my dreams.

    And I am not saying that just because I’m doing ok everything is fine but people have to take responsibility for their choices.

  16. drsmithy

    Again – You can get the same result with a different cause.

    For example ?

    Total Wages equals number of employees times amount paid per employee, so when we are talking about an industry that is volatile and wages don’t come down when times are bad not seeing wage increase in proportion to expansion is reasonable.

    So why isn’t capital share “volatile” as well ?

    Well lets see IR policies are what maes it more or less likely that a few “minor break ins and assaults” turn into “armed gangs and murders everyday”, the rate of unionisation, the rights of unions, the rights of employees to be in a union, the rights of employers to hire and fire etc all impact on this.

    Indeed. Now, what has been the trend of these things in Australia over the last thirty years ?

    And the changes in tax rates show that there is more than just what you are paid that matters it is how much of that pay you get to take home, Australians have had big increases in this take home pay over the last decade and more due to income tax rate cuts, how has the American employee fared?

    Taxes in the USA are even lower than Australia. As Mitt Romney noted, some 47% of American’s don’t pay any tax at all (actually I wouldn’t be surprised to see a similar figure in Australia, once transfer payments are accounted for).

    However, if taxes are dropping and take-home wages increasing, this implies the wages share should be increasing, not decreasing or remaining steady.

    Yep they could but given the time you say everything was good wages were only increasing by about 0.3% a year, do you want GDP growth to be that low?

    Why do you believe GDP growth is driven by wages growth ?

  17. Hamis Hill

    Interesting new Crikey article on the related field of rent affordability.
    The author invokes restraints on the supply which need to be solved for the sake of the larger economy.
    It’s a Housing/banking/speculator/Council crony Cartel I tells yah!
    And Dr Smithy’s point on the proportion of wealth captured by “Capital” proves the father of economics’ point about wages, profits and interest on loans.
    With low wages inducing high interest rates… ah what’s the point.
    Interest rates in Australia have been high compared to the rest of the world during the thirty year period of wage restraint; because of wage restraint according to the master.
    Capital inflows purchased by wage restraint, with Australians being very hard (productive) workers, of necessity, but not, in housing, at least, seeing very much band for their floating buck.
    Economically unsustainable.

  18. Ian

    Jimmy,

    I take it you are dong alright. Well after all that’s the main thing isn’t it?

  19. Jimmy

    “I’m all right so the rest of you can get f* ed” ? Neol iberal to the bones I see. Maybe you should change your name to Jack.

    No it’s “don’t blame others for your mistakes”, I bought a house I could afford and allowed for interest rates to be around 8-9%, the fact that they are now much lower means I can benefit from the lower rates, other bought houses they could only afford if rates were at historical lows – no one forced them to.

  20. Jimmy

    “Or wages could increase in line with GDP growth.” Yep they could but given the time you say everything was good wages were only increasing by about 0.3% a year, do you want GDP growth to be that low?

    Now when you are saying things are bad real wages growth is roughly 2%, thats 2% above inflation, what is the currentGDP growth rate again?

  21. Jimmy

    “I’m all right so the rest of you can get f*cked” ? Neoliberal to the bones I see. Maybe you should change your name to Jack.

    No it’s “don’t blame others for your mistakes”, I bought a house I could afford and allowed for interest rates to be around 8-9%, the fact that they are now much lower means I can benefit from the lower rates, other bought houses they could only afford if rates were at historical lows – no one forced them to.

  22. Jimmy

    Dr SMithy – “For the last thirty years, the top few percent of the US has sucked up nearly every cent of growth – leading to stagnant wages for the rest (which is really just a more pronounced example of what is happening in Australia). On what basis are you claiming this situation would be substantially different if the average annual growth rate of GDP had been ~5% instead of ~4% ?” As I said the $3t is so big that even if the top few percent had sucked up “nearly every cent of growth” it still would of had a massive impact on employment, remember 1% of $3t is $30b.

    “You still don’t get it. The number of people employed by the sector is irrelevant.” Total Wages equals number of employees times amount paid per employee, so when we are talking about an industry that is volatile and wages don’t come down when times are bad not seeing wage increase in proportion to expansion is reasonable.

    “And I’m still waiting for an argument as to why you think these things matter.” Well lets see IR policies are what maes it more or less likely that a few “minor break ins and assaults” turn into “armed gangs and murders everyday”, the rate of unionisation, the rights of unions, the rights of employees to be in a union, the rights of employers to hire and fire etc all impact on this.

    The changes in the last 20 years go to explaining why you bel ieve these problems have arisen? That is why everything was so good 30 years ago (despite no wages growth) and rapidly heading down hill now, if you can identify these you might even be able to identify a solution?

    And the changes in tax rates show that there is more than just what you are paid that matters it is how much of that pay you get to take home, Australians have had big increases in this take home pay over the last decade and more due to income tax rate cuts, how has the American employee fared?

  23. Jimmy

    Dr SMithy – “I think that argument is in direct conflict with the reality of a similar breakout in house prices in the US, where – as you keep reminding us – real wage growth was stagnant.” Again – You can get the same result with a different cause.

  24. drsmithy

    My figures are pure speculation but they show a few things that are undeniable.

    You are mixing relative and absolute figures and equating them to draw conclusions. Whether you’re doing it deliberately to deceive or accidentally due to ignorance is a side issue, but it makes your statements pointless.

    For the last thirty years, the top few percent of the US has sucked up nearly every cent of growth – leading to stagnant wages for the rest (which is really just a more pronounced example of what is happening in Australia). On what basis are you claiming this situation would be substantially different if the average annual growth rate of GDP had been ~5% instead of ~4% ?

    The number of people employed by that sector isn’t large, that’s the difference.

    You still don’t get it. The number of people employed by the sector is irrelevant.

    And I am still waiting on what the point is at which American pay federal tax, the various IR differences between the 2 countries and what exactly the changes have been in the last 20 years that have negatively effected wages (amongst other things)

    And I’m still waiting for an argument as to why you think these things matter.

  25. Jimmy

    Dr Smithy – “Your figures aren’t “generous”, they’re pure speculation.” My figures are pure speculation but they show a few things that are undeniable.
    1) The difference in growth between Australia and the US over the past 30 years is far from ” Not outrageously different”, if the US growth had been the difference would be in the vicinity of $3t, or 3 times our entire economy.
    2) There are more people unemployed in the US than our entire workforce. At roughly 8% unemployment that puts the US workforce around 150m people, even a 1% reduction in their unemployment would mean 1.5m people working, that is not insignificant.
    3) The sheer size of the $3t difference you believe isn’t outrageous means that even the most modest flow through, just 2 or 3% would mean millions more people in work.

    You can deny it if you want but we both know it is true. My figures could be out by 50% and the difference would still be outrageous.

    “By your logic here, with one sector of large wage increases dominating the economy, wages share across the entire economy should have been increasing, not decreasing.” The number of people employed by that sector isn’t large, that’s the difference.

    And I am still waiting on what the point is at which American pay federal tax, the various IR differences between the 2 countries and what exactly the changes have been in the last 20 years that have negatively effected wages (amongst other things)

  26. drsmithy

    I have been extremely generous in my figures.

    You’re making predictions about $3T in GDP growth spread out over thirty years to draw a conclusion about what spot unemployment would look like today, based on a back of the envelope calculation.

    Your figures aren’t “generous”, they’re pure speculation.

  27. Jimmy

    Dr Smithy – “And they could all ride to work on unicorns, as well!” I have been extremely generous in my figures.

    In truth, according to you, our $1.1t economy only dedicates about 40% to wages, so 11 million people are paid roughly $440b in wages for the year.

    If the US had grown by the same amount as Australia over the past 30 years and been $3t bigger only about 15% of that $3t would have to flow through to wages to equate to the entire annual wage bill of Australia.

    This would mean that as little as 7.5% of that $3t could flow through to new hirings and still the jobless rte would be halved. So while you can say there is no difference between the US and Australia’s performance in the last 30 years and you can say that the bulk of any benefit would of been swallowed up by capital and not impacted employment the truth is that the difference is so large that even if over 90% was swallowed anything other than new hirings, the remainder still has a massive impact.

    It would be nice if just once when the figures show you are wrong you would acknowledge it.

  28. drsmithy

    So there are more people unemployed in the US than our entire workforce, let’s just say that only 25% of that $3t actually flowed through to Wages and only say 80% of that was for new hiring and lets say that the average wage would be the same here in Australia (ie the same money gets the same amount of employees). Given a $1.1t economy here employs approx 11 million people, 20% of $3t ($600b) should employ about 6.6m but we will round down to 6m, that would halve the number of unemployed in the US and put the unemployment rate at around 4% which would pretty much full employment – but you are right it wouldn’t make much difference.

    And they could all ride to work on unicorns, as well !

  29. Jimmy

    “Probably not. Most of that $3T would have just been captured by capital, just like most of the “stimulus” they’ve been pumping in for the last few years has been.”

    “The number of unemployed persons, at 12.2 million, was little changed in December”

    So there are more people unemployed in the US than our entire workforce, let’s just say that only 25% of that $3t actually flowed through to Wages and only say 80% of that was for new hiring and lets say that the average wage would be the same here in Australia (ie the same money gets the same amount of employees). Given a $1.1t economy here employs approx 11 million people, 20% of $3t ($600b) should employ about 6.6m but we will round down to 6m, that would halve the number of unemployed in the US and put the unemployment rate at around 4% which would pretty much full employment – but you are right it wouldn’t make much difference.

  30. Jimmy

    “Wow. Seriously ? Using the same rubbery figures in the opposite direction, they’ve both increase by 2.5x. So not only are they close, they’re equal!” SO that would be the same “rubbery figures” you used to say “Not outrageously different” Wow. Seriously?

  31. drsmithy

    No but I would like you to outline which changes you bel ieve have lead to a reduction in wages (despite evidence of a dramatic increase in real wages).

    Stop lying. I have never claimed a reduction in real wages. I have stated that wages as a proportion of GDP are decreasing and concurrently, that capital share of GDP is increasing much faster.

    Examples please, for instance given the ridiculous amount of money spent on US elections at all levels and the virutally unlimited ability for corporations to donate how does the corporate influence compare between the US and Australia?

    Decreasing GDP share of wages, (faster) increasing share of capital.
    Increasing wage and wealth gaps
    Decreasing class mobility
    Increasing GINI coefficient
    Reduction in quality and availability of public services and/or privatisation of public services and property
    Reductions in workers rights
    Reduction in unionism rates
    Corporate influence in Government (mining tax being the prime example, but the numerous policies and handouts dedicated to maintaining the real estate bubble are another)

    Righto so at what point in the US do you start paying federal tax and how has that changed over the past decade.

    Couldn’t tell you off the top of my head, my accountant did my taxes when I was living there. Maybe you could expand on why you think it’s important.

    Yeah OK whatever $3t isn’t much is it, I mean our economy is about $1t and we support 11 million workers so I’m sure $3t wouldn’t impact the US at all.

    Pretty sure they’ve dumped $1T+ into the economy over the last few years and it’s done diddly squat for employment.

    Again you are transplanting American problems to Australia with no real evidence.

    Nope.

    Hang on we have been over this, median house price to median wage in Melb around 6 times, median house price to median wage in my region around 3 – 4.5 times, that is not comensurate. And if you happen to be something like a teacher or a nurse then there is no drop in pay.

    Median income Timboon: about $48k
    Median income Melbourne: about $69k

    Are you seriously going to try and argue the long term employment and career prospects are better in Timboon than Melbourne ?

    No my rebuttal would be no need to apply the same tactics to solve break ins and minor assaults as you would to armed gangs and murders everyday.

    Well at least you’ve moved on to agreeing that break ins and minor assaults need some attention, so I guess that’s something.

    SO far you have argued that house prices in the regions aren’t any lower than Melb, which is false, […]

    This is a lie.

    […] you have aruged that wages were better 30 years ago when real wages growth was less than 3% over 10 years compared currently around 2% a year […]

    This is a lie (and it’s comparing two different things – wages vs wages growth).

    […] and you have not outlined what you want to do to fix this wages issue […]

    This is not relevant.

    […] or addressed the fundamental differences in our Industrial relations system to that of America. […]

    This is mostly irrelevant.

    When you acknowledge these things maybe you can see the point I am making.

    You haven’t made a point yet. All you’ve done is insist Australia is awesome because America is bad.

  32. Jimmy

    “no need to worry about break-ins and minor assaults in our neighbourhood – two suburbs over they’ve got armed gangs roaming the streets and murders every day”
    I am also saying that just because there are break ins and minor assaults doesn’t necessarily mean that we are headed for armed gangs and murders – one doesn’t necessarily lead to another – plus the underl ying cause of both can be (and I suggest is) completely different.

  33. Jimmy

    “no need to worry about break-ins and minor assaults in our neighbourhood – two suburbs over they’ve got armed gangs roaming the streets and murders every day”
    I am also saying that just because there are break ins and minor assaults doesn’t necessarily mean that we are headed for armed gangs and murders – one doesn’t necessarily lead to another – plus the underlying cause of both can be (and I suggest is) completely different.

  34. drsmithy

    Do you think it just sheer coincidence that the highest period of real wages growth in the past 30 years also coincided with the break out in housing prices?

    I think that argument is in direct conflict with the reality of a similar breakout in house prices in the US, where – as you keep reminding us – real wage growth was stagnant.

    And you accuse me of cherry picking yet you make no mention of the fact that in your glory days of wages to GDP real wages growth was flat lining, less than 3% in 10 years, yet since then we had had approximately 2% a year for the last 15.

    I was actually talking about how different levels of interest rates compare.

    I do cheer low interest rates because I used them wisely, ti wasn’t low interest rates that made people over extend themselves and over pay for housing, they had the choice, house prices can’t go up if there aren’t willing buyers.

    “I’m all right so the rest of you can get f*cked” ? Neoliberal to the bones I see. Maybe you should change your name to Jack.

    It seems that given you are happy with virtually no real wages growth the only way left for wages to keep in line with GDP is for virtually no GDP growth – is that what you are advocating?

    Or wages could increase in line with GDP growth.

    And how are you doing with those other figures? And I see no comment on the tax rates and minimum wages of Australia V US?

    You seem to have found some yourself. Now, if you could construct some sort of argument with more weight than “look, it could be worse”, we might be able to get somewhere.

  35. Jimmy

    “Are you seriously trying to argue nothing has changed in Australia in 20 years ?” No but I would like you to outline which changes you bel ieve have lead to a reduction in wages (despite evidence of a dramatic increase in real wages).

    “Pretty much all of it, just at a slower pace.” Examples please, for instance given the ridiculous amount of money spent on US elections at all levels and the virutally unlimited ability for corporations to donate how does the corporate influence compare between the US and Australia?

    “This is false. There are standard deductions which serve the same purpose as our tax free threshold.” Righto so at what point in the US do you start paying federal tax and how has that changed over the past decade.

    “Most of that $3T would have just been captured by capital, just like most of the “stimulus” they’ve been pumping in for the last few years has been.” Yeah OK whatever $3t isn’t much is it, I mean our economy is about $1t and we support 11 million workers so I’m sure $3t wouldn’t impact the US at all.

    “You can, however, legislate against the loose lending standards that have fuelled the housing bubble.” Again you are transplanting American problems to Australia with no real evidence.

    “Where their incomes will generally drop commensurately.” Hang on we have been over this, median house price to median wage in Melb around 6 times, median house price to median wage in my region around 3 – 4.5 times, that is not comensurate. And if you happen to be something like a teacher or a nurse then there is no drop in pay.

    ““no need to worry about break-ins and minor assaults in our neighbourhood – two suburbs over they’ve got armed gangs roaming the streets and murders every day”. No my rebuttal would be no need to apply the same tactics to solve break ins and minor assaults as you would to armed gangs and murders everyday.

    SO far you have argued that house prices in the regions aren’t any lower than Melb, which is false, you have aruged that wages were better 30 years ago when real wages growth was less than 3% over 10 years compared currently around 2% a year and you have not outlined what you want to do to fix this wages issue or addressed the fundamental differences in our Industrial relations system to that of America. When you acknowledge these things maybe you can see the point I am making.

  36. Jimmy

    Dr Smithy – Do you think it just sheer coincidence that the highest period of real wages growth in the past 30 years also coincided with the break out in housing prices?

    And you accuse me of cherry picking yet you make no mention of the fact that in your glory days of wages to GDP real wages growth was flat lining, less than 3% in 10 years, yet since then we had had approximately 2% a year for the last 15.

    I do cheer low interest rates because I used them wisely, ti wasn’t low interest rates that made people over extend themselves and over pay for housing, they had the choice, house prices can’t go up if there aren’t willing buyers.

    It seems that given you are happy with virtually no real wages growth the only way left for wages to keep in line with GDP is for virtually no GDP growth – is that what you are advocating?

    And how are you doing with those other figures? And I see no comment on the tax rates and minimum wages of Australia V US?

    Hamis – “but the Mortgage debt is going to overhang the economy for decades at least, and it is stealing my customers and destroying my wealth creating capacity.” COnsumer confidence is down but not just because they are consolidating their debt position (which will benefit you long term) but because of fears about China, the US and the EU, I think 2013 will see fears about the first 2 ease and consumer confidence return. Already investment funds have got their appetite for risk back and are moving into the stock market and reports of super funds getting back into double digit growth last calendar year will put a spring back in consumers steps, however if Abbott is elected all bets are off.

  37. drsmithy

    How exactly has the system changed over those 20 years? Just because the results have changed doesn’t mean the system has.

    Are you seriously trying to argue nothing has changed in Australia in 20 years ?

    And how much of this is happening here?

    Pretty much all of it, just at a slower pace.

    In 2003 the point at which you first paid income tax was less than $7k in Australia, this financial year it is over $20k, in the US you are still paying 10% federal tax from dollar 1.

    This is false. There are standard deductions which serve the same purpose as our tax free threshold.

    Yep one economy has almost tripled while the other has only just doubled, not much different at all really.

    Wow. Seriously ? Using the same rubbery figures in the opposite direction, they’ve both increase by 2.5x. So not only are they close, they’re equal !

    2 things impact that proportion the growth of the pie and the growth of the slice, given the pie hasn’t grown evenly across all sector but wage increases in one sector do impact on other sectors, and the sector that has driven much of the growth in the past decade is very volatile and that wages tend to go up in the good times but not down in the bad a change in the proportion isn’t unreasonable.

    By your logic here, with one sector of large wage increases dominating the economy, wages share across the entire economy should have been increasing, not decreasing.

    Incidentally, the capital share has been growing quite steadily and linearly since the ’70s. It cannot be attributed to the mining boom.

    If the US had grown by as much as Australia in the last 30 years it would now be $3t bigger (which is 3 times the size of our economy), how much impact do you think that would have on the 8% unemployment level? Nothing outrageous I suppose!

    Probably not. Most of that $3T would have just been captured by capital, just like most of the “stimulus” they’ve been pumping in for the last few years has been.

    Again that comes down to personal choices, if people want to borrow excessive amounts to buy a house they can, you can’t legislate against that, […]

    You can, however, legislate against the loose lending standards that have fuelled the housing bubble, and the policies on urban growth limitation that have caused it.

    Rather tham say, encouraging and stimulating bubble-causing speculation on house prices by allowing negative gearing, creating capital gains tax exemptions and giving money to house purchasers so they can leverage themselves up even more, like the Governments of the last fifteen-odd years have been eagerly doing.

    […] but they also have the option of paying far less by moving to regional Australia as I demonstrated earlier.

    Where their incomes will generally drop commensurately.

    Look, your whole rebuttal is basically: “no need to worry about break-ins and minor assaults in our neighbourhood – two suburbs over they’ve got armed gangs roaming the streets and murders every day”. When you’re willing to contemplate the possibility that big problems don’t occur overnight, and grow from smaller problems that aren’t addressed, maybe you might be able to understand the points being made here.

  38. drsmithy

    As for logic – you and the good Dr say you prefer the system from 30 years ago but guess what, that system deliver less than 3% real wages growth between 1985 & 1995, it saw interest rates up around 18% – how is that better than what we have now?

    You mean when house prices were 1/3 (or less) than they are today in real terms ? Yes.

    Fortnightly mortgage payment on a 25y $450k mortgage @ 6% = $1300
    Fortnightly mortgage payment on a 25y $150k mortgage @ 18% = $1050

    However, you are (unsurprisingly) cherry picking the maximum with your 18% figure. Average mortage rates over the period would have been more like 13%. Here’s how that looks:

    Fortnightly mortgage payment on a 25y $150k mortgage @ 13% = $780

    You loudly cheer low interest rates, yet their artificially low level of the last 10-15 years are one of the biggest reasons for our current problems.

  39. Hamis Hill

    Jimmy, glad for some agreement but the Motgage debt is going to overhang the economy for decades at least, and it is stealing my customers and destroying my wealth creating capacity.
    Not made any easier by the orgy of economic idiocy indulged in by the conservatives and their Old Media urgers.
    It is like living under the Sword of Damocles.

  40. Jimmy

    Hamis – “The Resrve Bank is trying to engineer a soft landing for all the destructive property speculation of the golden calf era, Jimmy, trying not to scare the horses at the same time, how could you miss that?” I haven’t missed that but it’s exactly my point, we are currently having a soft landing, as opposed to the US crash, which means under the current system the economy is adjusting, we don’t need to change.

    “f the Bad ecomomic managers are returned to power federally we are all stuffed.” Completley agree but that is a reason not to change the present.

    “Private debt for small businesses, secured by a decent enterprise plan guaranteeing a capacity to repay the loans through profits is the tried and true prudential lending policy of yesteryear, and dangerous property speculation is not.” I think the GFC out paid to that as well and again we were nowhere near the US.

  41. Hamis Hill

    Jimmy the GFC answers that one.
    But the mortgage debt is taken out over 25 years now so all the stagnant capital gain has achieved is more negative equity for the borrowers and reducing asset prices for the lenders.
    The Resrve Bank is trying to engineer a soft landing for all the destructive property speculation of the golden calf era, Jimmy, trying not to scare the horses at the same time, how could you miss that?
    And the conservative doom watch is not helping, nor arguably is locals trumpeting a “Private Debt Crisis Down Under”, even though there have been plenty of warnings from OS commentators, querying the economic foundations of our escape from the GFC.
    Private debt for small businesses, secured by a decent enterprise plan guaranteeing a capacity to repay the loans through profits is the tried and true prudential lending policy of yesteryear, and dangerous property speculation is not.
    If the Bad ecomomic managers are returned to power federally we are all stuffed.
    In Qld it has to be “Cyclone Yasi. The Brisbane Floods. The Newmann Austerities: Disaster Insurance? Anyone BUT Abbott!”.

  42. Jimmy

    Hamis – “And why the public spectre of dole blugers groaning in the poverty gutter is maintained as an inducement to escape such a fate by embracing debt.
    The midlle and prudent course of living within one’s means thereby abandoned with poor prospects of escaping the eternal overdraft?” Not all debt is bad but again no one forces people to borrow, no one forces to live beyond their means, no one forces people to send their kids to private school, no one forces people to holiday overseas.

    On top of that look at the savings rates of the past 4 years – people have made the adjustment, they are living within their means.

    And even if they weren’t it is beyond the authority of govt to make them and before you go on about govt facilitating it, look at the scaling back of middle class welfare that has happened in the last 6 years.

  43. Hamis Hill

    Jimmy, reply in moderation.
    Answers some of your questions and posits others.
    In particular increasing levels of private debt creating the “Times” which Howard cliamed suited his side of politics, etc.
    And why the public spectre of dole blugers groaning in the poverty gutter is maintained as an inducement to escape such a fate by embracing debt.
    The midlle and prudent course of living within one’s means thereby abandoned with poor prospects of escaping the eternal overdraft?
    German Industry have achieved it: why not the wealthiest people on the planet?

  44. Jimmy

    Hamis – While you are waiting for the moderator perhaps you can answer me this question, in the last 5 years what has the rate of growth in housing prices been compared to real wages growth?

  45. Hamis Hill

    Il Papa ? the moderator strikes?

  46. Hamis Hill

    Hey Jimmy, you do not think that Howard knew what he was doing with the increasing private debt when he said that “the times would suit” his side of politics?
    Your fellow worshippers include the credit card clutching, mindless Mall Hags in a permanent funk as, care of the GFC (What?) the easy credit dried up.
    The debt junkies feel the pain but it is all the evil witch’s fault intones Il Papa of the Golden Calf, and the Howard Heaven will be restored if you just vote for me.
    Sarcasm aside, Jimmy, you are not being rational in your arguments.
    Abject poverty as in the “dole bludger” is not to be eradicated as in Switzerland, because the spectre of life in the gutter is held up as fate to be avoided by embracing debt; debt at any price for the more desperate.
    It is a moral problem worthy of more philosophy than you are bringing to the table IMHO.
    When debt walks in the door prudence flies out the window?
    And the drug peddler analogy, along with addiction, is arguably very apt.
    But don’t you worry about that! It is all good!

  47. Jimmy

    Hamis – So now The issue isn’t wages growth but peoples mortgage debt? Again that comes down to personal choices, if people want to borrow excessive amounts to buy a house they can, you can’t legislate against that, but they also have the option of paying far less by moving to regional Australia as I demonstrated earlier.

    And again I am unsure what facts and figures you want or what changes to the current legislative set up you acutally want to remedy whatever problem you bel ieve exists.

    “But it all has to be paid for by increasing work hours among your self-exploiting small business people with no choice but to reduce their hourly rewards to meet the interest bills on those higher interest rates.” And what impact would increasing wages have on thses small business owners and their incentive to run their own business as compared to working for a wage?

    As for logic – you and the good Dr say you prefer the system from 30 years ago but guess what, that system deliver less than 3% real wages growth between 1985 & 1995, it saw interest rates up around 18% – how is that better than what we have now?

  48. Hamis Hill

    Is the $1.25 TRILLION Howard mortgage debt included in your GDP?
    Or the annual $60 BILLION mortgage interest bill?
    All in the GDP measure?
    Certainly an economy will grow under the “Carry Trade” where higher interest rates (caused by insufficient local savings) inspire some to borrow at low rates overseas and invest in high rates in Australia.
    But it all has to be paid for by increasing work hours among your self-exploiting small business people with no choice but to reduce their hourly rewards to meet the interest bills on those higher interest rates.
    The general rates of private indebtedness have gone up, but for the myopic worshippers of the Biblical “Golden Calf” there is no tomorrow when the debt must be paid?
    Your posts reek of too much religious zealotry; false religion unfortunately of the Abbott and Howard variety.
    Is your immunity to logical argument complete?
    Give us the facts and figures Jimmy!

  49. Jimmy

    Hamis – What do you call all those things I quoted in post 215?
    And as for your post what facts and figures do you want because “And somehwere this new entrepreneurial class will have to ask where their customers are getting their money.” is a bit vague.

    “Your focus on GDP, however, shows you still don’t understand the fundamental point: the PROPORTIONs of GDP being divided up is changing.” 2 things impact that proportion the growth of the pie and the growth of the slice, given the pie hasn’t grown evenly across all sector but wage increases in one sector do impact on other sectors, and the sector that has driven much of the growth in the past decade is very volatile and that wages tend to go up in the good times but not down in the bad a change in the proportion isn’t unreasonable.

    “So over the last 30 years, USA real GDP has gone from about $6T to about $13.5T, and increase of about 2.25x. Australia has gone from about $400B to about $1100B, and increasing of 2.75. Not outrageously different.” If the US had grown by as much as Australia in the last 30 years it would now be $3t bigger (which is 3 times the size of our economy), how much impact do you think that would have on the 8% unemployment level? Nothing outrageous I suppose!

  50. Hamis Hill

    Give us the facts and figures Jimmy!

  51. Jimmy

    Dr SMithy – “So over the last 30 years, USA real GDP has gone from about $6T to about $13.5T, and increase of about 2.25x. Australia has gone from about $400B to about $1100B, and increasing of 2.75. Not outrageously different.” Yep one economy has almost tripled while the other has only just doubled, not much different at all really.

  52. Jimmy

    Dr Smithy – “Indeed. The difference between a Saturday and a Monday. Crazy, eh ?” And what day was it again I originally asked you for that info.

    “So over the last 30 years, USA real GDP has gone from about $6T to about $13.5T, and increase of about 2.25x. Australia has gone from about $400B to about $1100B, and increasing of 2.75. Not outrageously different.” Really you don’t think a 10% difference in growth every year for 20 years is “outrageously different” OK it’s you fantasy!!

    “Your focus on GDP, however, shows you still don’t understand the fundamental point” I didn’t just ask you for GDP figures though did I, I asked for comparisons of real wages growth, minimum wage growth, how minimum wages are set, rate of unionisation, employees rights to be unionised, unions rights, employers ability to hire and fire and a comparison of the 2 tax systems and how they have changed over the past 20 years.

    “We had a system that was delivering more equality and a fairer distribution of wealth decades ago.” How exactly has the system changed over those 20 years? Just because the results have changed doesn’t mean the system has.

    “They’re on a road of increasing inequality, decreasing class mobility, increasing wage gaps, significant corporate influence over Government, decreasing workers rights and stagnant (at best) living standards.” And how much of this is happening here?

    From my 2 minute research “Americans’ average hourly pay has risen only 6 percent since 1985, adjusted for inflation”

    “It is worth reviewing what has happened to real wages through time. As part and parcel of the Accord between the Labor government and the ACTU, real wages grew by a mere 2.8 per cent in the period 1985-95 (as measured by adult male ordinary time earnings). In the next decade, real wages grew by 21 per cent. Between 2006 and last year, which covers both Work Choices and the global financial crisis, real wages grew by 10 per cent.” SO hang on, real wages were growing by less than 3% 20 years ago & 10% in the last 6 years with 20% growth in betweeen – this system really needs to be fixed.

    In Australia the minimum wage in 1996 was $9.19 per hour, in 2012 it was $15.96, that’s a 74% increase over 16 years.
    In the US in 1996 the minimum wage was $4.75 and 2012 it was $7.25 (or $4.97 in 1996 terms) which is a 46% increase.

    In 2003 the point at which you first paid income tax was less than $7k in Australia, this financial year it is over $20k, in the US you are still paying 10% federal tax from dollar 1.

    So as I done some of the work I asked of your for you perhaps you could find the rest?

    And could you provide the GINI coefficient for the US and it’s change in the last 30 years and how Australia’s rate of 34 ranks compared to the rest of the world.

  53. Hamis Hill

    A restoration of state involvement in the provision of “serviced” land.
    A ressurection of Whitlam’s Department of Urban Renewal and Development.
    A restoration of 99 year leases for residential land in the A.C.T..
    With the competition reducing living costs and therefore wages, especially for public servants.
    Ditto a reduction in the costs of welfare payments spent on Housing.
    The tearing up of Federal/State Housing aggreements to provide affordable housing; which have been effectively white-anted by either State or Federal Conservative governments at the behest of the Housing/Banking/Speculator Cartel.
    An inclusion of housing inflation in the Consumer Price Index so that the Reserve Bank has power to act against said cartel, especially since the ACCC pulls the wise monkey act in this regard.
    An end to the Bank practice of only lending to Small Businesses on the collateral of MCMansion Housing.
    What Jimmy,you didn’t know that this lending policy created the McMansion market?
    Which some peabrains mistake for wealth creation?
    Yes, small business entrepreneurs are taking more profits instead of wages as their rewards for wealth creation; fine as long as they aim for the German model of being self financing and keeping former interest payment’s for themselves.
    And somehwere this new entrepreneurial class will have to ask where their customers are getting their money.
    Give us some facts and figures on that one Jimmy!

  54. drsmithy

    SO you have the time to look up real estate in Timboon but not this?

    Indeed. The difference between a Saturday and a Monday. Crazy, eh ?

    And given you have us going down the same road as the US I would at least expect you to know what road they are on.

    They’re on a road of increasing inequality, decreasing class mobility, increasing wage gaps, significant corporate influence over Government, decreasing workers rights and stagnant (at best) living standards.

    So over the last 30 years, USA real GDP has gone from about $6T to about $13.5T, and increase of about 2.25x. Australia has gone from about $400B to about $1100B, and increasing of 2.75. Not outrageously different.

    Your focus on GDP, however, shows you still don’t understand the fundamental point: the PROPORTIONs of GDP being divided up is changing. The pie has doubled in size, but the proportion that labour is getting has shrunk, and the proportion that capital is getting has grown (and grown much more).

    The same thing has happened in the US, only more dramatically, so their wages growth hasn’t just been slowed, it’s beeen stopped.

    Another indicator is Australia’s GINI coefficient, which has gone from about 27 to about 34 in the last thirty years.

    You may think them irrelevant but would we be better off if the wages had of kept pace with the GDP increase?

    This is becoming tiresome. Stop trying to divert the topic.

    No you need to present alternatives, if you think the system needs improving it is necessary to know that it actually could be improved, that any changes required to fix the current alleged problem don’t have negative side effects that make the solution worse. SOmetimes it is better the devil you know.

    What was wrong with the devil we knew 30 years ago ?

    No but you want it fixed but have no idea how so we don’t know whether we a putting a system that has delivered very well at risk to fix one perceived problem.

    We had a system that was delivering more equality and a fairer distribution of wealth decades ago.

    Every system has flaws, if the worst the system has to offer is that I can grow my wealth but just not as fast as some others then it isn’t that bad.

    It used to be better. Why are you so intent on defending a situation that’s getting worse, just because it’s could be getting worse quicker ? Why shouldn’t we be striving to make inequality better, rather than being satisfied it’s not getting worse as quickly as some other countries ?

  55. Jimmy

    Ian – ” Let’s set up new banks and building societies to replace those that have been privatized (less than 30 years ago).” I do all my banking through a credit union and I get a much better deal, there are plenty of them about so I think that one is covered.

    ” Let’s give back the rights the unions had to strike etc and lets get back a really progressive taxation system that has now been gutted and continues to be gutted.” You’ll have to give me a bit more detail on exactly what you are referring to here Ian.

  56. Jimmy

    Hamis – “Jimmy, there is plenty of evidence in previous posts and generally, of the conservative side of politics trying to take us down the US path.” There is a distinct difference with this comment and the statement that “we are heading down the US path”, when Howard tried to move to a more US style IR setting the population said NO.

    Even if the Libs get in next time they will have to battle against a more left wing senate, so they will find it difficult to take us that way.

    As it stands right now we are a very different society to the US, and all the areas I highlighted demonstrate that.

    And if you want to talk about how our dole compares to the US there is another stark contrast.

  57. Hamis Hill

    Jimmy, there is plenty of evidence in previous posts and generally, of the conservative side of politics trying to take us down the US path.
    The original article called for a world-wide comparison of Australia’s dole scheme with others.
    You are bogging the debate down with your rhetoric.
    And probably dissuading other posters from contributing, considering that most would not know what you are on about, and the rest find nothing edifying enough to capture their attention.
    More contributions are needed to keep this kettle boiling, otherwise the fire will go out.
    Hit the reset button.

  58. Ian

    Jimmy (201),

    Obviously we can’t reverse all the policies that have led to this inequality problem, certainly not at once, but as a real start let’s stop privatizations and amalgamations of big businesses into monopolies. Let’s set up new banks and building societies to replace those that have been privatized (less than 30 years ago). Let’s give back the rights the unions had to strike etc and lets get back a really progressive taxation system that has now been gutted and continues to be gutted.

    It is impossible to say a priori everything we need to do but if we recognize the causes of the problem and have a will to change things to address it then the +-15% of us who are concerned about these things can put our heads together and work on it.

    To bring this argument back full circle to the matter raised in the article, let’s NOT reduce the Newstart allowance or whatever they like to call it.

    Having said all that I personally believe it’s too late as climate change, resource shortages, the debt crisis etc etc etc are converging (have converged) on us at a rapid rate and no-one in real power is doing anything to address the issues – apart from sending in the military that is. Australia may or may not manage for a little longer than other countries but we certainly will not be able to isolate ourselves from the turmoil.

    That’s it for me. Bye.

  59. Jimmy

    Oh and “And how much tax would have they been paying under the RSPT?” I am on record as saying the RSPT would have been better but the MRRT is better than nothing.

  60. Jimmy

    Dr SMithy – “Maybe you could summarise, then, for those of us at work who don’t have hours to spend doing the research you want.” SO you have the time to look up real estate in Timboon but not this? And given you have us going down the same road as the US I would at least expect you to know what road they are on.

    “And as I explained earlier, all these things are irrelevant to the question being asked.” You may think them irrelevant but would we be better off if the wages had of kept pace with the GDP increase?

    “Rubbish.” No you need to present alternatives, if you think the system needs improving it is necessary to know that it actually could be improved, that any changes required to fix the current alleged problem don’t have negative side effects that make the solution worse. SOmetimes it is better the devil you know.

    “Another straw man. No-one, anywhere, has suggested we “chuck it out”.” No but you want it fixed but have no idea how so we don’t know whether we a putting a system that has delivered very well at risk to fix one perceived problem.

    Every system has flaws, if the worst the system has to offer is that I can grow my wealth but just not as fast as some others then it isn’t that bad.

    “What I _want_ to happen is for the growth in inequality and other issues to be addressed and our society to start resembling the social democracies of northern Europe again, more than America.” How? And again how exactly are we similar to the US?

  61. drsmithy

    Provide the facts & figures and the reasons will be self evident, […]

    Maybe you could summarise, then, for those of us at work who don’t have hours to spend doing the research you want.

    As I asked earlier if the mining sector got such big wages increases would they give them up when growth in mining slowed? And exactly how much would mining wages have to increase to make up the difference? And what impact would this have on wages pressures in other sectors? And how would having another small sector of the community earning disproportionally large incomes have on “cost of living pressure” and housing affordability? And given the impact the mining boom has already had on the skills shortage how would the extra high wages impact on that? And given the level of investment required in mining to ensure the mining boom continues how would paying out billions in extra wages impact that?

    And as I explained earlier, all these things are irrelevant to the question being asked.

    No but it does make whinging about it a little bit hollow. If you can’t propose a remedy you can’t thikn of what possible down sides that remedy might have, so you don’t know whether the net gain is better or worse than what we have now (the whole cane toad thing).

    Rubbish.

    Yes there are negatives about our current system but at the end of the day, we have had a sustained period of growth, a sustained period or real wage growth, a sustained period of low unemployment and an increase in our standard of living so the current system isn’t that bad, to want to chuck it out for something unknown is more than a bit silly.

    Another straw man. No-one, anywhere, has suggested we “chuck it out”.

  62. Jimmy

    “Perhaps if you were a bit more specific about the reasons _why_ Australia is different, we might be able to discuss them.” Provide the facts & figures and the reasons will be self evident, you could also through in the difference in employee rights to be in a union and the employers ability to hire or fire based on union membership.

    “This is a straw man. No-one has stated other sectors should have increased their wages thus, the question being asked is why *haven’t* mining wages increased to maintain the same ratio?” As I asked earlier if the mining sector got such big wages increases would they give them up when growth in mining slowed? And exactly how much would mining wages have to increase to make up the difference? And what impact would this have on wages pressures in other sectors? And how would having another small sector of the community earning disproportionally large incomes have on “cost of living pressure” and housing affordability? And given the impact the mining boom has already had on the skills shortage how would the extra high wages impact on that? And given the level of investment required in mining to ensure the mining boom continues how would paying out billions in extra wages impact that?

    “Not knowing exactly how to fix a problem does not mean the problem doesn’t exist.” No but it does make whinging about it a little bit hollow. If you can’t propose a remedy you can’t thikn of what possible down sides that remedy might have, so you don’t know whether the net gain is better or worse than what we have now (the whole cane toad thing). Yes there are negatives about our current system but at the end of the day, we have had a sustained period of growth, a sustained period or real wage growth, a sustained period of low unemployment and an increase in our standard of living so the current system isn’t that bad, to want to chuck it out for something unknown is more than a bit silly.

  63. drsmithy

    People claim we are heading down the same path as the US but there are some quite fundamental differences that make this assertion plainly false – look at our tax systems and the changes in the last 20 years, look at a real wage growth and the changes in the last 20 years, look at the minimum wage, look at the process by which it is set, look at the rates of unionisation and the rights of unions, look at the growth in GDP.

    Perhaps if you were a bit more specific about the reasons _why_ Australia is different, we might be able to discuss them.

    To expect that other sectors need to increase there wages so to keep the balance is just ludicrous.

    This is a straw man. No-one has stated other sectors should have increased their wages thus, the question being asked is why *haven’t* mining wages increased to maintain the same ratio? The other question being asked, is why has capital been taking a steadily increasing share for the last thirty-odd years ?

    And despite frequent requests neither you nor Dr Smithy have been able to outline how you would like the situation to be remedied.

    Which is completely irrelevant. Not knowing exactly how to fix a problem does not mean the problem doesn’t exist.

  64. drsmithy

    I have never bought that rubbish and never will.

    Well, you’re certainly doing a good job of parroting its agenda.

    NO I am arguing that there is no evidence we are moving in the same direction as America, the reason for the difference in wages to GDP has come about for different reason, not a holding back of wages but a massive growth in GDP in one sector in particular.

    You need to go back and look at the ABS graph again. Capital share of profits has been trending quite steadily upwards since the ’70s.

    http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5204.0Main%20Features22011-12?opendocument&tabname=Summary&prodno=5204.0&issue=2011-12&num=&view

    Who pays? When manufacturing & Retail in particular are weak in this country how do they come up with the extra money , which is not just $10k but $10k plus super, plus payroll tax, plus workcover.

    That’s an entirely different argument. Your original argument was that wage increases across the board (ie: the wages share staying constant) were inherently a bad thing, not that in the current situation it’s impractical in some sectors.

    Thats not what I am saying, you can’t have it both ways, that our living standards are higher but cost of living pressures are greater […]

    Of course you can have it both ways. The whole *point* of civilised society is to increase wages and living standards across the board, not just for a minority.

    My point is people now have govt assistance – what more do you want the govt to do to assist them?

    Ideally I don’t want Government to assist them at all. I want their incomes to be at a level where they don’t need assistance.

    The comparison wasn’t with the rest of the world it was with wages then and now.

    You claimed things have gotten cheaper because of lowering tariffs. This implicitly means imported goods. How are prices of imported goods in Australia not relevant to prices of the same goods in other countries ?

    Because a slightly smaller pecentage of a much bigger pie is different to a smaller percentage of a pie the same size.

    Uh, are you trying to argue the USA’s GDP has not increased in the last few decades ?

  65. Jimmy

    Ian – I see your list of possible factors which I think have varying levels of merit but regardless simply saying these should be reversed isn’t an answer, how is that achieved, for example how do you compel a manufacturer to reverse the off shoring of jobs if it forces them to pay higher wages?

  66. Jimmy

    Hais – Provide the facts and figures I requested and you will see my point.

    People claim we are heading down the same path as the US but there are some quite fundamental differences that make this assertion plainly false – look at our tax systems and the changes in the last 20 years, look at a real wage growth and the changes in the last 20 years, look at the minimum wage, look at the process by which it is set, look at the rates of unionisation and the rights of unions, look at the growth in GDP. To go further you could compare our public health & education systems or the lower and middle classes access to tertiary education.

    It has also been claimed that workers rights have been eroded in the last 20 years but when challenged on this point it magically changed to “under attack”.

    We are nowhere near “going down the same path as the US” based on the facts and figures and the reason for the differential in the wages V GDP is that one sector (which employs a very small percentage of Australian workers) has contributed a disproportional amount to the growth in GDP. To expect that other sectors need to increase there wages so to keep the balance is just ludicrous. And despite frequent requests neither you nor Dr Smithy have been able to outline how you would like the situation to be remedied.

  67. Hamis Hill

    Jimmy, did it ever occur to you that your arguments are quite classically trivial, revolving about logic, rhetoric and grammar, and that facts and figures belong to another school of thought altogether?
    Are you educationally equipped to deal with facts and figures?
    Suburban solicitor, high school debating champion and long-term PM John Howard appeared unperturbed by “Facts and Figures”, as his records show.(but only to those capable of recognising facts and figures?)
    Wouldn’t you, like him, be happier with figments of your imagination which you can argue in and out of existence according to your whims?
    Core and Non-core promises?
    You appear immune to facts and figures, what might you use them for?
    Really?
    There is nothing in you previous posts to answer this question.
    Perhaps it is an educational deficit.

  68. drsmithy

    They aren’t paying tax when the commodity price dropped by about 50% which is what happens under a profit based tax, wait to see how much is paid for the March quarter.

    And how much tax would have they been paying under the RSPT ?

    Here’s a comparison of the RSPT vs MRRT. Knock yourself out.
    http://www.smh.com.au/business/rspt-v-mrrt–the-differences-20100702-zs7a.html

    They question to ask is why, and the answer is that the mining sector growth has been unusually high so even very good wages growth has diminished as a percentage of GDP […]

    No, that doesn’t explain why at all. It doesn’t explain why employee wages in the mining sector have not expanded at the same rate.

    […] this is not the same as what has happened is the US.

    And what _did_ happen in the US ?

    Well what do you want to happen to address the wages to GDP issue?

    I have already said I don’t pretend to know everything that needs to be done.

    What I _want_ to happen is for the growth in inequality and other issues to be addressed and our society to start resembling the social democracies of northern Europe again, more than America.

  69. Jimmy

    Dr SMithy – “We have allowed a bunch of multinational corporations come in and dictate to us how they should be taxed (with predictable results – ie: they’re not paying any tax).” They aren’t paying tax when the commodity price dropped by about 50% which is what happens under a profit based tax, wait to see how much is paid for the March quarter.

    “Henry wanted to tax capital more (eg: land tax) and labour less” While capital may not have been being taxed more over the past 20 years labour has definitely been taxed less.

    “The questions to ask are why, and what the consequences will be of that shift in wealth distribution.” They question to ask is why, and the answer is that the mining sector growth has been unusually high so even very good wages growth has diminished as a percentage of GDP – this is not the same as what has happened is the US.

    “As I quite explicitly said, whether or not I “want” something to happen is a completely separate issue.” Well what do you want to happen to address the wages to GDP issue?

    And still waiting on those facts and figures!

  70. drsmithy

    SO you want some of the highest paid employee’s to be paid even more? And how much more would it take for the to make up that 10% differential?

    As I quite explicitly said, whether or not I “want” something to happen is a completely separate issue.

    The problem here is that a much larger (and growing) share of GDP is being captured by capital. A concurrent problem is that labour share is dropping. The questions to ask are why, and what the consequences will be of that shift in wealth distribution.

    How does changing the tax system impact what is essentially an industrial relations issue? The rich and miners paying a higher rate of tax might help fund some important infrastructure projects and Gonski and the NDIS but it won’t change the wages to GDP ratio.

    Henry wanted to tax capital more (eg: land tax) and labour less. It may not change the wages ratio, but it will help to recapture the wealth that’s been going to capital.

    And you can’t say that a govt when an MRRT has actually been introduced (yes it could of been better but it is better than nothing) we have gone backwards in this area.

    Arguably doing nothing wouldn’t have been any worse.

    Further, we have gone backwards. We have allowed a bunch of multinational corporations come in and dictate to us how they should be taxed (with predictable results – ie: they’re not paying any tax).

  71. Ian

    @Jimmy (186),

    You ask what the government can do to address the growing inequality issue? If you look at my post 124 which was moderated but now appears I listed a whole lot of things that have been instrumental in causing the inequality problem in the first place so to begin with those policies should be revised, abandoned and hopefully reversed. Dr Smithy also provided a similar list of policies that have lead to growing inequality in this country.

    I would like to add something else – slow down the rate of non-renewable resource exploitation through proper environmental assessment processes and limit multinational corporation and foreign government ownership of our assets. Slowing our mad race to extract every last drop of our natural resources and instead actively encouraging a diverse economy will modify the the wealth accumulation of those sectors much of which (85% of profits) end up in foreign hands and so don’t benefit us. Our airwaves and control of our money supply should also be seen as part of the commons not to be sold of to the highest bidder.

  72. Jimmy

    Also Dr SMithy – If mining wages went up with mining profits do you thik those workers would wear the decrease in wages if commodity price plunge?

  73. Jimmy

    Dr SMithy – “The right question is _why_ haven’t wages for mining employees gone even higher ?” SO you want some of the highest paid employee’s to be paid even more? And how much more would it take for the to make up that 10% differential?

    And what impact would that one sector being paid phenomonally high wages do for the rest of the economy and “cost of living pressures” or house prices for the rest of us?

    “Implementing the changes in the Henry Review would be a good start.” How does changing the tax system impact what is essentially an industrial relations issue? The rich and miners paying a higher rate of tax might help fund some important infrastructure projects and Gonski and the NDIS but it won’t change the wages to GDP ratio.

    And you can’t say that a govt when an MRRT has actually been introduced (yes it could of been better but it is better than nothing) we have gone backwards in this area.

  74. Hamis Hill

    First Principles you ask?
    Isn’t that what all those silly scientists and engineering types operate on?
    Imagine the world where the above operated on bankers principles?
    Someone has already described living in caves as the probable result.

  75. Hamis Hill

    Wealth is created by a combination of labour, capital (taken as raw materials-ore,wood in their raw form) and borrowed money.
    The resulting wealth is distributed as a reward to the labourers as wages, the owners of the raw materials as profits and lenders of money as interest.
    If the profits on the supply of raw materials remain constant and the interst rates go up then wages will fall.
    If wages fall, savings fall and interest rates rise.
    Put in the right context, that of the whole history of money, and you have Old Testament Prophets getting up the punters for selling their birth rights for a “mess of pottage”.
    If the present dependence on a debt rather than savings economy continues then the grandchildren will become enslaved by the debts entered into by their free ancestors.
    How about we solve the problem by bringing back the Jubilee
    law that in the fiftieth year all debts are written off, and that third generation is restored to freedom.
    In practice, as the fiftieth year approached lenders saw that the only way to get their money back was to actively intervene in the economic fortunes of the indebted family and set them up to be so successful as to have no excuse not to return their borrowings before the debt dooms day.
    So, stuffed with a surfeit of “pottage”, care of the immediate results of spending unearned money, (Howard’s worship the “Golden Calf” era?), have some posters overlooked the lessons of our Judeo-Christian heritage?
    They work even for a life-long (starting at the age of four when they tried to make me pray, at school, to someone who wasn’t there) atheist like myself.
    Strangely enough, the sack of the evil-empire was done by “Christian ” barbarians, who left the ordinary people (their fellow Christians) alone and went looking for the bankers. (worshippers of Jove, By Jove!?)
    The Icelandic economy is said to be rebounding after a similar treatment of their bankers.
    Are the problems really as complicated as some posters make them out to be?
    Who could possibly benefit by hiding the simple facts of the mechanism by which the rich get richer and the poor get poorer and entire civilsations over the millenia have thereby collapsed and died?
    Bring back the Jubilee!
    Because the problem is not new.

  76. drsmithy

    The proportion of Wages to GDp because one sector of the economy has grown the GDP dramatically, so the question remains how do they want the proportion to stay the same, give every worker in Australia a $10 k pay rise, dramatically increase the already high mining wages or decrease GDP?

    You’re asking the wrong question.

    The right question is _why_ haven’t wages for mining employees gone even higher ? Whether I or anyone else “want” that to happen is a separate issue.

    People complain here but no one has said what they want the govt to do?

    Implementing the changes in the Henry Review would be a good start.

  77. Jimmy

    Dr SMithy – “devotees of The Australian’s editorial team” I have never bought that rubbish and never will.

    ” only a quarter of the houses in that particular example come close to qualifying as affordable,” What is listed on a real Estate website at anyone time is not a good sample, we agreed the media house price was low $200ks so using you 3 times the median household income you get within about $10k, which indicates housing is affordable, and almost twice as affordable as Melb, so my origianl point that if people can’t afford to buy a house in Melb they can consider moving to the regions.

    “You seem to be arguing that so long as Australia is not as bad yet as America is today, we have nothing to worry about.” NO I am arguing that there is no evidence we are moving in the same direction as America, the reason for the difference in wages to GDP has come about for different reason, not a holding back of wages but a massive growth in GDP in one sector in particular.

    “And the problem with giving everyone in the country a pay rise would be what, exactly ?” Who pays? When manufacturing & Retail in particular are weak in this country how do they come up with the extra money , which is not just $10k but $10k plus super, plus payroll tax, plus workcover.

    “It’s a good thing people with your attitude haven’t been running the world since civilisation began, otherwise you’d be talking about how it’s ok most people are still living in straw huts, because at least their living standards haven’t gone backwards.” Thats not what I am saying, you can’t have it both ways, that our living standards are higher but cost of living pressures are greater – people have choices – Bali may only be marginally more expensive that a caravan holiday 20 years ago but spending your holidays at home is much cheaper, I just booked my first holiday in 4 1/2 years.

    “Yes, that’s kind of the point we’re trying to make. “Normal” people (indeed, if you listen to the coalition, households earning 2-3x the median wage, so well above normal) now “need” Government assistance to get by,” My point is people now have govt assistance – what more do you want the govt to do to assist them?

    ” We *do* pay nearly much more for a fridge (or a car) as many other countries world.” The comparison wasn’t with the rest of the world it was with wages then and now.

    “They got re-elected once or twice before people really started to get angry ?” Workchoices came in, they went out.

    “Unionised workers make up some ~20% of the working population, they weren’t the ones that voted out Howard.” They were the ones who convinced the population to vote howard out. And at 20% our union labor is 3 times the US.

    “Why is the situation different ?” Because a slightly smaller pecentage of a much bigger pie is different to a smaller percentage of a pie the same size.

    And you still didn’t provide any of the figures I asked for.

  78. drsmithy

    also where do people think the extra wealth of these companies goes, it goes to shareholders which we all are in our super funds

    The ASX200 has been basically flat for 4-5 years, and is currently at the same level it was in 2005.

  79. Jimmy

    Also contrast the fact that Obama has to try and legislate a minimum wage increase where ours are set by an independent tribunal.

    also where do people think the extra wealth of these companies goes, it goes to shareholders which we all are in our super funds

  80. drsmithy

    Amazing as it may seem, I have more interesting things to do on the weekend than argue on the internet with devotees of The Australian’s editorial team.

    Dr Smithy it doesn’t matter how many houses at what price are on the website, you picked the method by which affordability is to be calculated and when we use household income (which after all is who buys houses) it fits perfectly into your idea of what constitutes affordable. And when we compare it to affordability in Melb the contrast is staggering. It is your own words that have blown you out of the water.

    No, what I actually said was you’d struggle to find many places that qualify as affordable anywhere in Australia. Which is perfectly true – only a quarter of the houses in that particular example come close to qualifying as affordable, and even then most of those only for two-income families of some description.

    And on the share of the pie, as I said earlier when one sector brings its own pie it’s a bit hard to keep the share over all sectors the same, unless you think mining wages should just keep going up to maintain the wages to GDP proportion.

    The problem is as much the skyrocketing share being taken by capital as it is the shrinking share by labour. There still hasn’t been a good justification made for why that should be considered ok.

    You keep saying we are going down the same path as the US, could you please provide figures for the US GDP growth, Real Wages growth and union membership over the last 20 years in comparison to Australia’s so we can see the similarities

    My comment that Australia is heading down the same path is on the political, economic and philosophical outlooks of (most of) out political leaders.

    You seem to be arguing that so long as Australia is not as bad yet as America is today, we have nothing to worry about. Presumably your mother never told you about what a stitch in time can help with, nor your school teachers about things like positive feedback loops.

    I just did some calls over night and if people want wages to GDP in this country to have stayed the same, ie be about 10 percent hier than at present, the only ways to achieve that are onto wipe off a considerable amount of GDp, ie go into a depression, or give every worker in the country a$10 k pay rise.

    And the problem with giving everyone in the country a pay rise would be what, exactly ?

    Oh and the viability of the one income household, those households generally ran one car, owned one TV, holidayed in a caravan at the beach, didn’t own mobile phones, iPads, laptops etc.

    Yes, like most of them probably still do. Though you need to account for the fact that TVs are dramatically cheaper than they have been in the past, a holiday to Bali is probably only marginally more expensive (if at all) than a holiday locally, mobile phones cost about the same as a landline used to, and you can pick up a laptop for a few hundred dollars.

    It’s a good thing people with your attitude haven’t been running the world since civilisation began, otherwise you’d be talking about how it’s ok most people are still living in straw huts, because at least their living standards haven’t gone backwards.

    Plus those one income households didn’t have FTB or a baby bonus to get by.

    Yes, that’s kind of the point we’re trying to make. “Normal” people (indeed, if you listen to the coalition, households earning 2-3x the median wage, so well above normal) now “need” Government assistance to get by, and trying to take that assistance away is called “class warfare” (by those who claim to be good economic managers, no less).

    That fact alone should be causing you to stop and think for a while.

    And on your lawn mowers and refrigerators point,how much of your weekly wage did they take to buy however many decades ago you are talking about? And how long did the door handles last on a falcon in the 80’s? The labor reforms of bringing down tariffs have had massive benefits for our economy & standard of living but if you would prefer to pay twice as much for an inferior fridge and still have higher unemployment than we do now go for your life.

    Huh ? We *do* pay nearly much more for a fridge (or a car) as many other countries world. Only now the difference isn’t going into tariffs, it’s going into the pockets of a handful of wealthy people at the top,

    And you may say tat penalty rates are somewhat endangered but look at what happened to the last govt who seriously attacked them?

    They got re-elected once or twice before people really started to get angry ?

    That waning union power Dr Smithy talks about had them voted out in a landslide. And even if they are under threat that is far cry fromDr Smithys claim that they have already gone.

    Unionised workers make up some ~20% of the working population, they weren’t the ones that voted out Howard. Further, I never said they were “already gone”.

    My point is that while the lack of wages growth is an issue in the US some are trying to simply transplant their problem to here when clearly the situation is very different.

    Why is the situation different ? The fundamental problem is that the share of labour is shrinking and the share of capital is growing (and at a faster rate). Workers wages not increasing as fast as productivity is one symptom of this problem. Workers wages not increasing at all is a more severe example of the same problem. The problem is the same, it’s just the severity that’s different.

    It has very much turned into a trickle-up economy.

    It’s always a trickle-up economy. Wealth is created at the bottom, not the top. The hard part is stopping the rentiers at the top from skimming so much off that the rest of society starts to suffer. We are failing at that task, and they are taking a steadily-increasing proportion of the wealth we are creating.

  81. Jimmy

    Ian yea I know what Dr Smithy has been saying but my point is why has this been happening? The proportion of Wages to GDp because one sector of the economy has grown the GDP dramatically, so the question remains how do they want the proportion to stay the same, give every worker in Australia a $10 k pay rise, dramatically increase the already high mining wages or decrease GDP?

    In the US the issue has arisen because wages haven’t grown that is not the case here, in the US you start paying tax from dollar 1 here the point at which you pay tax has increased dramatically over the last 20 years.

    People complain here but no one has said what they want the govt to do?

  82. CML

    @ Ian – “It has very much turned into a trickle-up economy”. Absolutely correct. That article I mentioned earlier proves exactly that. And you are correct about what happens next.
    The politicians and police do the bidding of the “corporatists” in America. It will happen here too, eventually….but not without a lot of people being hurt first. I think we are just seeing the beginning of what is to come, with even a Labor government withdrawing/not increasing support for some vulnerable groups. They have chosen that path rather than increase taxes from those who can well afford to pay, both individuals and corporations.
    If the coalition is elected later this year, it will just hasten the process.

  83. Ian

    James,

    I think what Dr Smithy has being saying all along is not that wages have not grown in Australia but that their share of the total pie has decreased and continues to fall, ie inequality is increasing.

    It has very much turned into a trickle-up economy. This is serious from a practical as well as moral point of view. From a practical point of view there is bound to be civil unrest and repression when the bubble bursts just as their has been in a big way in the northern hemisphere.

    And make no mistake the powerful are not going to relent once the sh*t hits the fan as it will do sooner or later.
    In the northern hemisphere non-violent protest of any size has invariably met with a violent response by the police. This was the case with the Occupy movement here in Australia.

  84. David Hand

    Good grief Hamis,
    I though all the traditionalists crying about the departure of the 60’s were in the Liberal party.

    And you call Abbott unreconstructed.

  85. Jimmy

    Come on Hamis, they lived in state housing and had weekenders?

    My Grandparents lived in state housing and they definitely didn’t have even the smallest luxury.

    All I am saying is that people complain about cost of living pressures but how many cups of coffe do they buy each week, how many mobiles do they own, where do they holiday each year?

    And on your lawn mowers and refrigerators point,how much of your weekly wage did they take to buy however many decades ago you are talking about? And how long did the door handles last on a falcon in the 80’s? The labor reforms of bringing down tariffs have had massive benefits for our economy & standard of living but if you would prefer to pay twice as much for an inferior fridge and still have higher unemployment than we do now go for your life.

    And you may say tat penalty rates are somewhat endangered but look at what happened to the last govt who seriously attacked them? That waning union power Dr Smithy talks about had them voted out in a landslide. And even if they are under threat that is far cry fromDr Smithys claim that they have already gone.

    My point is that while the lack of wages growth is an issue in the US some are trying to simply transplant their problem to here when clearly the situation is very different.

    Dr Smithy I am still waiting for those figures?

  86. Hamis Hill

    Lived in affordable state housing.
    Had enough income to buy the lawnmowers, refrigerators, washing machines and motor vehicles that they made themselves in local factories.
    Actually owned things called Weekenders.
    Appreciated the efforts of former generations who used the shortage of labour in the colonial era to claim the vote, establish high wage rates and low interest, building, in 1900, the highest standard of living in the world.
    And now? Those penalty rates and overtime, dependent on the eight hour day, now somewhat endangered, by the drive for greater debt instead of greater savings?
    All characterised by Sunday worship in the Mall.
    Perhaps history repeats and it is all cyclic like the Rise and Fall of the R’n Empire.
    Got a bit mindless towards the end there as well.
    Did the Gadarene Swine gallop over the cliff? Or did they slide over on those ignored pearls of wisdom?
    There’s a squeal as you plummet away, Jimmy?

  87. Jimmy

    Oh and the viability of the one income household, those households generally ran one car, owned one TV, holidayed in a caravan at the beach, didn’t own mobile phones, iPads, laptops etc.

    Plus those one income households didn’t have FTB or a baby bonus to get by.

  88. Jimmy

    hamis have you never heard of penalty rates and overtime?

  89. Hamis Hill

    Jimmy, whatever happened to the eight hour day?
    And viability of the one-income household?
    And the weekend off for everyone?
    Yes they all disappered more than twenty years ago, but how much worse could workers’ rights become?
    Yes David, give it a rest, stop casting your pearls before swine.

  90. David Hand

    I’ve made my points.
    I’m out.

  91. CML

    The article is on the BBC World Service website under news, and is titled: “Oxfam seeks ‘new deal’ on inequality from world leaders”.
    Some mind-boggling stuff there!

  92. CML

    I’ve been moderated as well folks, and I don’t know why?
    Please see the Oxfam research on the BBC website.

  93. CML

    Thought I would just throw into the mix a report overnight from the BBC World Service. Oxfam says the richest 100 people on the planet, “earned” two-thirds of the world’s income over the past 20 years. One quarter of their income over that time would have eliminted poverty worldwide. (I’m relying on memory, but think I’ve got that right). Food for thought perhaps?

  94. Jimmy

    I just did some calls over night and if people want wages to GDP in this country to have stayed the same, ie be about 10 percent hier than at present, the only ways to achieve that are onto wipe off a considerable amount of GDp, ie go into a depression, or give every worker in the country a$10 k pay rise.

    And Dr smithy while you are finding those other figures for me could you outline exactly what workers rights have been eroded in the last 20 years, and how the US minimum wage has changed in the last 20 years compared to Australia, plus compare the Australian tax rates to the US and how they have changed over the last 20 years.

  95. Hamis Hill

    Mina, there does seem to be a certain mindset which does not like to have facts interfere with their opinions.
    It is a fact that the world’s first welfare state was put in place by the founder of a united Germany.
    And it was done in response to the widespread property crime that followed the 1848 Depression which, by putting people out of work, threatened them with death through starvation. Fact, not an opinion.
    And you provide an accurate picture of the anarchic methods used by people to survive where there are no social security nets. However Dr Smithy has done a sterling job of holding up rational argument in the face of “faith” based dogma from the worshippers of the free market.
    The resultant survival of the fittest mentality is quite contrary to the teachings of “the saviour” of humanity who said that the strong should use their advantages to protect the weak not send them off to destruction in cattle cars.
    It is appropriate on a Sunday to emphasise that the Enlightenement Philosophers were ultimately inspired by the reading of the Bible, especially the Gospels.
    Which is why it is sad to see, even for non-believers, people falling into a religious belief in an utopian free-market,plainly only as a convenient excuse to free themselves fron all moral restraint when it comes to exploiting their neighbours.
    There is a good logical reason for believing that the “rich” will not get into a heaven, anywhere, when it is plainly obvious that they become “rich” by creating hellish conditions on earth.
    The Bible and its mass printing was the stimulus for the Renaissance and the Reformation and sadly, some have not yet caught up with those advances and remain trapped in a Medieval, unenlightened, Totali tarian mindset where, steeped in ignorance, “opinions” trump facts and people are easily manipulated into shameful, “inhuman” behaviour.
    Smith’s objective was “to understand commercial society and better it”, hardly the objective of an economist.

  96. Mina

    Oh my god drsmithy, only if you could hear the way you sound.
    And err? Some people never work pay tax or insurance still can get the dole. People who income don’t exceed the tax free threshold aren’t exactly paying unemployment insurance, the medical cost, support for their children and education if they have them, infrastructure, police and other kind of services cost much more.
    Yes I was paying all my bills on budget plans. Mobile is cheap these days, Internet are freely available at library, university and free wire fire areas. You don’t need that much Internet, when ur unemployed you’re better off focusing on up grading your skills and job hunting.
    It’s disputable that the number who abuse the system whether working under the table while receiving the dole or just plain lazy are small. As a percentage it is small but as the number of people it is not that small. There’s also problem with people who abuse substance ending up with the police and the court when they commit crimes, when they get sick and need expensive medical treatments, when their children growing up doin the same thing as them, there’s much more costs than you’d like to admit. Bureaucratic cost depend on the type of policy. If you give them a sense of purpose and motivation or you want to be punitive. I don’t know if you cut people’s dole off than they would turn to crimes like people argue. In other countries people just have to work and support themselves without government help, while around the world people run drug or human trafficking making millions of dollars, burglars also make good money too, having money does not stop people from committing crimes.
    That’s it, as I have said people don’t try a balance discussion but only give slanted view. I don’t have interest to discuss on this anymore , it’s pointless.

  97. Hamis Hill

    Those moral philosophers might point out the moral failings of people who use their credit ratings to purchase homes which are subsequently rented to people who are subsidised by the public purse, ie on welfare benefits.
    The public interest would be better served if the public themselves were the landlords for these people and thepublic enjoyed the capital gains.
    Then again the public might not desire capital gains seeing a simple interest to keep costs down and subsidies down.
    It follows that the capital gains in ever increasing rents and property values must accrue to the owners at the expense of wage earners.
    If wages are not rising and housing costs are, then the benficiaries of the spending of the wages will lose out, or ultimately pay almost directly for the capital gains of those owning houses to rent out.
    So are you quite happy doing over the other sectors of the economy for your private gain when it is clear that it is in the interest of the public and industry (As happens in Germany)that housing costs do not “inflate”.
    You don’t know what I am talking about do you?
    The economic health of the nation sacrificed to the blind greed of housing speculation!
    Do we really have to allow private profit to fasten itself on the backs of welfare recipients, especially when we never know when we might join their ranks ourselves?
    A moral dilemma.
    Please do not blame your moral failings on “dole bludgers”.

  98. Jimmy

    Dr Smithy- You keep saying we are going down the same path as the US, could you please provide figures for the US GDP growth, Real Wages growth and union membership over the last 20 years in comparison to Australia’s so we can see the similarities

  99. Jimmy

    Dr Smithy it doesn’t matter how many houses at what price are on the website, you picked the method by which affordability is to be calculated and when we use household income (which after all is who buys houses) it fits perfectly into your idea of what constitutes affordable. And when we compare it to affordability in Melb the contrast is staggering. It is your own words that have blown you out of the water.

    And on the share of the pie, as I said earlier when one sector brings its own pie it’s a bit hard to keep the share over all sectors the same, unless you think mining wages should just keep going up to maintain the wages to GDP proportion.

  100. drsmithy

    It looks like we even have a consensus if your final sentence si what you meant. Small business is growing rapidly as a share of the economic cake.

    Well, our upcoming economic catastrophe will undoubtedly wreak disproportionate havoc on the SMB sector, so if that is the answer, then profit share of capital should decrease notably.

    That’s not what’s happened in the US though, so I don’t expect it to happen here.

  101. drsmithy

    And now your arguments that buying wouldn’t be cheaper than renting and that the median wage is too low for the median house price have been blown out of the water […]

    Two houses out of 40 advertised are affordable for someone on a median wage. Maybe 10 out of the 40 for a household on a median income.

    You have an odd idea of “blown out of the water”.

    […] you are trying to say moving is just too hard and expensive, well I suppose that’s a personal choice. But country people make the move to the city all the time.

    I was responding to a completely different poster on a different topic.

  102. David Hand

    Doctor,
    I think your question about where the share of the pie is going if not to wages is a really interesting one.

    It looks like we even have a consensus if your final sentence si what you meant. Small business is growing rapidly as a share of the economic cake.

  103. Hamis Hill

    Dr Smithy @157

  104. Hamis Hill

    One of Howard’s Prime Ministerial thought bubbles saw Australia having a mobile work force, like the States, who were conditioned to uprooting and following the work over the vast distances of a continent.
    Overlooking the constraints outlined by Dr Smithy’s last post.
    Looking at these people in the US, known to us as trailer park or poor white trash, they exercised their mobility at the end of the Iran-Iraq war which, in Texas. closed down the oil industry as cheaper middle east oil came back on stream.
    In the good times they had taken out Thrift Society loans (or version of credit unions) to get mortgages on Actual LJ Hooker, western suburb style brick venereal houses on the ouskirts of Texan cities.
    Come the bust, they hooked up the Caravans (trailers) to the Pick-ups and took off leaving the Thrift Societies with a million? mortgage defaults, with the ensuing bank collapses finally threatening the four major US banks.
    The classic GFC precursor.
    So let’s bring on Little Johnnies’ thought bubble and let a US style Mobile workforce arise.
    There won’t be any large economic consequences now will there?
    If I try to spell it out any longer for you David, I’ll be moderated for length.

  105. drsmithy

    Yes you’ve got me thinking.
    I see the direction of your comment. I guess I don’t see the outcomes you would expect occurring in society if most of the wealth was being taken by a tiny elite as has happened in the USA.

    Uh, really ? Because it seems quite clear to me Australia is following the exact same path America (and the UK, for that matter – it seems to be an Anglo problem) has for the last few decades, just with a couple more safety nets (that the conservatives inevitably try to tear down or cripple whenever they get in power, anyway) in place.

    The Governments of the 15-odd years doing everything possible to kick the can on housing ponzi at the cost of the rest of the country is one example.

    Ever-reducing tax rates is, of course, another.

    Unionism rates and workers rights going into the toilet.

    The rise of corporate power and lobbying (exhibit A: the mining tax)

    Sales of public assets (at least we’re creating some infrastructure with the NBN, but that will undoubtedly be Telstra’d by some future Liberal Government).

    Spending cuts across all levels of Government. Reductions in accessibility and quality of public services.

    A practically religious obsession with public debt, the near complete dismissal of private debt.

    The problem in Australia is certainly not as bad as it is in America, but the trend is clear, as is the commitment to its path by the two main political parties (the differences in economic policies between new Labor and the Liberals are nearly nonexistent).

    That’s not to say that inequality has not risen but I don’t think that explains the shift away from wages that you put forward. Especially when the captains of industry earning 7 figure salaries probably still count as wage earners for a significant percentage of their income.

    That’s kind of my point.

    I can only speculate that it is the self employed, SME world where the full benefit of avoiding PAYG is possible that might be contributing a lot to the shift. It may mostly be that a lot more people earn their income outside the PAYG space in 2013

    This isn’t a 2013 thing, it’s a decade-long trend (and much longer than that if you look at the increase in share of capital, as well as the decreased share of labour).

  106. Jimmy

    Dr smithy The cheapest thing on there just qualifies as affordable under your interpretation for a single income household, for a duel income with a $68 k median income, low $200 ks is right on your affordability calc and is more than twice as affordable as Melb or Sydney, which is the point I was making in the first place.

    And now your arguments that buying wouldn’t be cheaper than renting and that the median wage is too low for the median house price have been blown out of the water you are trying to say moving is just too hard and expensive, well I suppose that’s a personal choice. But country people make the move to the city all the time.

  107. Hamis Hill

    David,nasty but not really personal reply in moderation.
    Probably too long and boring?

  108. drsmithy

    Drsmithy, people who have never worked or paid tax because their incomes don’t exceed the tax free threshold still can receive the dole. You can argue that the people who earn a little pay gst, that possibly covers some medical and social services that the government provides.

    Err… And ?

    I have lived below the dole rate budget for a couple of years working two part time jobs to pay for my brother’s expensive IT course at a private institution. It’s not great and you can only party once in a while but it’s not that bad.

    Are you covering all your costs ? Accomodation ? Transport ? Phone/internet ?

    Training means gaining skills and create your own opportunity, if you don’t start up your own business you may have the skills that make you more employable or skills that are in shortage which employers often seek frm overseas, there are unskilled labour in country areas which employers have to import workers because no Australian want it.
    It can be hard when there is no opportunity but if people get training it will improve their chances. I’m not well versed in politics and economics, and don’t have the time to look up terminolgies people are using here +I’m using my friends mobile. I can say that there are all kind of people who receive unemployment benefit from good people who have bad luck to strange drug dependent people and lazy people. There are all kinds the government has to deal with. I’ll leave it there, I can’t discuss economics, only some thoughts on the dole the topic of this article.

    I don’t think anyone likes that some clearly undeserving people sit on the dole for their entire lives. My argument is, and always has been, that the proportion of people who do this is vanishingly small, and the cost of reducing or recouping the “waste” that goes to them in terms of bureacratic waste and quality of life impacts to people who aren’t rorting the system, is too high.

    Certainly countries with more generous welfare systems, don’t seem to have any problem moving people off welfare when there are jobs to be had.

  109. Hamis Hill

    David, dullard banalities are quite easy to comprehend.
    Extrapolating your arguments to their future conclusions should not be too hard either.
    The chain of command in any enterprise requires that those higher in authority actually have the knowledge to supervise the activities of those under them.
    No authority without responsibility and no responsibility without the requisite knowledge, which you suppose to sub-contract out with the responsibility going to some third party “standards” authority.
    Presumably so that you can concentrate, arse-up and head-down in your narrow cleft of specialisation, sharpening your advantage without having to bother with actually paying any attention to what your “co-specialists” are actually up too, all taken on some sort of trust?
    Seems to me that you fit the “don’t know where you are coming from and therefore do not know where you are going” Chinese adage.
    This does seem to be the middle-class, letters after your name tactic of forming acrcle like musk oxen when confronted with critcism of their specialist inadequacies from out side of their ranks.
    We’ve all experienced the dinner party “what do you do” questions asked to establish a position in the pecking order.
    None of them have the least knowledge or interest in the other’s specialised fields of endeavour and simply assume that certain superficial credentials assure their intellectual pretensions.
    So David, spare us your happy-clapper statements of faith in the operations of the free-market, because it is obvious that you donot understand its operations.
    The reasonable suspicion is that this is a transferance, forgive me if I am wrong, of a faith-based education system that eschews science, logic or even democracy.
    Now if you have not experienced the latter then of course you will not understand, and it the burden of those with a hard acquired rational mindset to put up with drivelling dogma sprouted by ignoramuses and built on an intellectual vacuum.
    The bottom line is that such people have been taught to ignore the 500 years of hard won progress since the Renaissance and Reformation.
    The disrespect for those efforts is deep and ugly and deliberately ingrained and I will not bore you with Smith’s description of those whose education is inadequate for the needs of a free society.
    Something to do with being essentially “deformed” as I recall, far more scathing than I could ever be.
    But you don’t understand what I’m saying do you?

  110. drsmithy

    The discussion about country/city house prices and income and unemployment levels can be related to perceptions that unemployed people are dole bludgers who could all ‘better themselves’ if they moved to a low unemployment, low housing cost region. In my view this is rot, unless perhaps they all move to Timboon.

    The main reason it’s a rubbish argument is because it makes the assumption that relocation is a simple, low-cost exercise, when it’s not (well, it usually is for the people making the argument, but it’s not when you’re poor).

    Relocation is expensive. Not only in terms of a non-trivial up-front cash outlay to actually move all your stuff, pay a bond, etc ($hundreds, if not $thousands), but the disruption in leaving behind all your social support structures. Plus, potentially, a move could result in higher expenses (eg: you used to leave your child with your parents but now have to put them into daycare).

  111. drsmithy

    Median house price in Timboon being $275k, you are absolutely dreaming, the $500k house would have a lot of acres and plenty of bed rooms I would suggest, my parents and brother still live there and especially given the number of houses for sale the median price would be closer to $200k, remember you are looking at a real estate site, not exactly what I would call realistic valuations.

    I was making an estimate based purely on eyeballing realestate.com.au. I didn’t try to suggest otherwise.

    Domain says a $230k median. So low 200s seems reasonable.

    And I believe I said affordable, not cheap but $150 k is a cheap house.

    You did say affordable. But the cheapest thing available only just qualifies as “affordable”, and along with “affordable” needs to come “cheap” so that people can reasonably choose to compromise between housing and other priorities.

    $150k isn’t cheap if you only earn fifty grand a year. “Cheap” would be down around $80-100k.

  112. David Hand

    Doctor,
    Yes you’ve got me thinking.
    I see the direction of your comment. I guess I don’t see the outcomes you would expect occurring in society if most of the wealth was being taken by a tiny elite as has happened in the USA. That’s not to say that inequality has not risen but I don’t think that explains the shift away from wages that you put forward. Especially when the captains of industry earning 7 figure salaries probably still count as wage earners for a significant percentage of their income.

    I can only speculate that it is the self employed, SME world where the full benefit of avoiding PAYG is possible that might be contributing a lot to the shift. It may mostly be that a lot more people earn their income outside the PAYG space in 2013

  113. David Hand

    Hamis,
    Who was that I saw in a fluoro vest and a hard hat on the front page of today’s Weekend Australian Inquirer section.

    distinctly femine look. With red hair.

    My eample of a safety specialist outsourced service is just a select representation of the multiplication of self employed contractors and service providers that have increased massively in the past 10 years.

    It’s a way engineering companies lift the competency of their health and safety performance and there has been a remarkable improvement in safety performance by Australian companies since Workcover policies came into force to penalise businesses that injur their employees.

    You have no idea at all what i’m talking about, don’t you?

  114. Mina

    Drsmithy

    Drsmithy, people who have never worked or paid tax because their incomes don’t exceed the tax free threshold still can receive the dole. You can argue that the people who earn a little pay gst, that possibly covers some medical and social services that the government provides.

    The dole has fallen about $30 per week behind, you can argue for$40 for people who live in Sydney but it’s a crap place tO live in, it’s better to move away.
    I have lived below the dole rate budget for a couple of years working two part time jobs to pay for my brother’s expensive IT course at a private institution. It’s not great and you can only party once in a while but it’s not that bad.
    Training means gaining skills and create your own opportunity, if you don’t start up your own business you may have the skills that make you more employable or skills that are in shortage which employers often seek frm overseas, there are unskilled labour in country areas which employers have to import workers because no Australian want it.
    It can be hard when there is no opportunity but if people get training it will improve their chances. I’m not well versed in politics and economics, and don’t have the time to look up terminolgies people are using here +I’m using my friends mobile. I can say that there are all kind of people who receive unemployment benefit from good people who have bad luck to strange drug dependent people and lazy people. There are all kinds the government has to deal with. I’ll leave it there, I can’t discuss economics, only some thoughts on the dole the topic of this article.

  115. Jimmy

    Lyn yes some regional areas have a scarcity of work, but there are plenty that don’t like mine. And with housing affordability significantly better than the major cities it is an option that some should consider.

    It is also an area that govtshould look at more encouraging employers to move to the regions, this will not only improve josh opportunities in regional areas but could smooth out the difference in affordability between the city and the regions.

    Dr Smithy even if Timboon is only just affordable, or maybe not quite affordable,on your scale it is about twice as affordable as the city. And given the second income earner in the household income figures you quoted earns only about $21 k even if the lose that income FTB or the dole would make up a lot of it.

  116. Lyn Gain

    It might seem as though we’e wandering away a bit from the policy focus of this discussion, which I assume is whether Newstart is too low and should be increased. But I don’t think we are, really. The discussion about country/city house prices and income and unemployment levels can be related to perceptions that unemployed people are dole bludgers who could all ‘better themselves’ if they moved to a low unemployment, low housing cost region. In my view this is rot, unless perhaps they all move to Timboon.
    @Jimmy ‘You could work in the nearest regional city’. Before they moved my job 150km away, I was still travelling an hour each way to Coffs Harbour, as I live in a rural area (no shops or other amenities) south west of Bellingen which is half an hour from Coffs. My point is that even in the regional centre, many types of jobs are scarce.

  117. Hamis Hill

    All things being equal, lower house prices in the country should ensure that employers could offer jobs at lower wages without decreasing the discretional spending power of those workers.
    So where is the evidence that industry is flocking to these areas of “employment” advantage?
    It worked for SA in attracting industry.
    Perhaps the NBN will facilitate this part of the economy.

  118. Jimmy

    Lyn in my region unemployment is low, as I posted earlier in 2010 it was less than the state average, we don’t have the climate of Coffs Harbour.

    Here and in other regional centres housing is more affordable and unemployment isn’t an issue but people choose the city.

    Even if you lived in Timboon you could works in the nearest regional city and spend less time travelling than in melb

  119. Lyn Gain

    Jimmy & Drsmithy, There can be no argument that house prices are cheaper in the country. The question is ‘are they more affordable?’ I’m afraid smithy that it’s true that many occupations (especially professional) are paid the same in the country as in the city. However, there are far fewer jobs in the country – in my region unemployment is very high – what’s it like in yours Jimmy? I had to go on the dole for a while a few years ago when my university units were moved from Coffs Harbour campus to Tweed Heads, and one of my colleagues was forced to relocate to keep his job. I also know very many highly qualified people doing sales jobs etc. because of lack of employment in their own fieds.

  120. Jimmy

    Median house price in Timboon being $275k, you are absolutely dreaming, the $500k house would have a lot of acres and plenty of bed rooms I would suggest, my parents and brother still live there and especially given the number of houses for sale the median price would be closer to $200k, remember you are looking at a real estate site, not exactly what I would call realistic valuations.

    And teachers and nurses are employed by the state, my sister is a teacher in Melbourne and she is on the same pay scales as my mum inTimboon.

    And I believe I said affordable, not cheap but $150 k is a cheap house.

  121. Jimmy

    Just to compare those median figures to Melbourne of an annual wage of, $67k and a house price of $567 k, it is clearly more affordable in my town.

  122. drsmithy

    Dr smithy people don’t come to the regions because there aren’t any jobs? What about the hospital in the Wimmera that offered a Dr position with a $400k salary and got no applicants?

    I don’t know the specifics, so I’m not going to comment, other than to again point out that anecdotes are not data.

    Statistics show that people are fleeing regional areas for cities. The most common reason given is employment opportunities. Immigration policies that don’t require new immigrants to first live in regional areas don’t help either.

    And on median wages etc, teachers and nurses earn the same if they live in bMelb or the regions, trades Wich are in demand due to the Gas industry and dairy industry plus good growth in housing in the regional city earn roughly equivalent money especially on union sites.

    Teacher and nurses salaries aren’t adjusted by locale ? I find that difficult to believe.

    In short there is plenty of affordable housing around here, especially if you bring some equity from a city house.

    You need to have the equity first. Possibly realistic for people over about 35 (depending on how lucky they were), unlikely for anyone under 30.

    An affordable house tops out at around 3x income. I had a quick look on realestate.com.au at Timboon, and the cheapest house for sale is about $150k. From there prices climb quickly and fairly evenly up to $500k. From eyeballing the numbers, I would guess the average house price there is around the $275k mark.

    Median income in Australia is about $47k. That means for half the working population, the cheapest house in Timboon barely qualifies as affordable. Median household income is about $68k, which makes houses into the low 200s affordable, though with a concurrent risk of pressure if household income drops suddenly (eg: one person losing their job, or stopping work to have children).

    So, yes, there’s some affordable housing about. “Plenty” of it, I’d have to disagree with. Certainly bugger all that qualifies as “cheap”.

  123. Jimmy

    Just tired getting the median figures for you Dr and all I could find was an article in the local paper from the 29 of dec saying the median weekly income was above $1000 a week and the median house price in 2008 was $275k which given the flat housing prices in the last. 4 years wouldn’t be too far off.

    I also found a 2010 report showing unemployment was 5.2 compared with Victorias 5.4 and the percentage of the lowest 40 percent of income earners experiencing mortgage stress was 7.7 compared with the state figure of 9.2

  124. Ian

    You’re doing a good job doctor in exposing the lie of neoliberal spin.Thank you.

    Efficiency, productivity, best practice, bench marking are weasel words that can be used to justify anything. The minute I hear them uttered my instincts tells me I should be suspicious and raise my guard. Another one is this so-called trap of a Japan-like aging population problem.

  125. Jimmy

    Dr smithy people don’t come to the regions because there aren’t any jobs? What about the hospital in the Wimmera that offered a Dr position with a $400k salary and got no applicants?

    The small town I used to live one where my rental property is has a p 12 school, hospital, 2 banks, supermarket, butcher, pub, 3 cafes, distillery and various other businesses, services a big dairy industry and the tourism industry of the great ocean rd, and is just 40 minutes from a city of about 30k, plus numerous other bigger town within 30 minutes, unemployment isn’t an issue.

    And on median wages etc, teachers and nurses earn the same if they live in bMelb or the regions, trades Wich are in demand due to the Gas industry and dairy industry plus good growth in housing in the regional city earn roughly equivalent money especially on union sites.

    In short there is plenty of affordable housing around here, especially if you bring some equity from a city house.

  126. drsmithy

    I think I get what you are thinking – that if we are to be more affluent, our wages should rise and will stay approximately in line with historical levels – or even grow.

    No. You are focusing on absolutes and individual examples, I am talking about proportions and the entire economy.

    I am saying that the PROPORTION of wealth being collected by labour is dropping, and the PROPORTION of wealth being collected by capital is increasing (and at a much faster rate).

    If so, I think the answer may be that the economy has changed radically and many more people make their money through other channels than wages.

    There are many more businesses and service providers today than there used to be. In 1970, large corporations employed tens of thousands of people to do everything. Today, most businesses outsource non core work to outside suppliers. Say I’m an engineering firm and I used to do my own safety training. To improve safety I may contract that work out to specialists. My wage bill goes down and I pay an invoice to “ACME trainers”. Acme may be a small business made up of half a dozen of my ex employees who now specialise in safety. They may choose to pay themselves through dividends or profit share.

    Sure. But all those people working for ACME trainers are collecting a wage. Across your two companies, why should the proportion of wealth being collected by workers have dropped and the proportion of wealth being collected by capital owners have increased ?

    Therefore in my business, wages share of my “pie” has gone down. My two workers earn twice as much as they used to. My customers get cheaper concrete. With the money they save from my cheaper concrete, they eat out more. My redundant workers get jobs in restaurants. Or in an airline as my newly affluent concrete buyers go on a holiday they would not otherwise take.

    So across that entire ecosystem, why should the proportion of the pie being collected by all the workers have decreased and the proportion being collected by capital have increased ?

  127. drsmithy

    Yes. Labour as an input to production has fallen steadily in the past 50 years. It began with manufacturing in the 50s and 60s and then into services as technology applications emerged in the 90s and 00s.

    In fact, having now had a couple of hours on a bike to think about it, the reasoning here is completely backwards.

    As efficiency-increasing technologies like automation and computing have increased, capital investment per unit of output should have decreased, not increased. The tasks that are done by people should be getting more valuable, not less. If anything, the wages share should be going up, not down, as productivity and output have dramatically increased while capital requirements have shrunk.

    What is happening in reality is that the wealth generated by increasing productivity is being captured more and more by a handful of people at the top. Which shouldn’t really surprise anyone, since it’s the core objective of neoliberal economics.

  128. Ian

    Hamis,

    I’ve had a post moderated too, I can’t think why. Maybe I said Rome.

    Rome, Rome, Rome, bloody Rome.

    Oops!

  129. Hamis Hill

    That would be like someone popping on a safety vest, day after day, then, in the absence of any other evidence in policies or performance, claiming qualifications for the nation’s top job.
    As long as he is carrying a reliquary box containing the thumb from The Invisible Hand of The Market, faithful worshippers like David and friends will flock to his Banner?
    A nastily derisive but otherwise accurate description?

  130. Hamis Hill

    David, by passing the responsibility for safety to “specialists” becomes then subject to the risk of abandoning oversight of safety matters himself and being subject to bland assurances of competence in such specialists without the wisdom or judgement to determine otherwise.
    Then the demand goes up for taxpayers to police compliance with any such “Standards” as might exist.
    Hence an “Admiralty” evolves to discipline the “privateers”, or pirates, in to a proper, pre-eminent navy.
    In the meantime, David is taking a lot on trust, a bit like supporting an Abbott government; now there’s a privateer if ever there was one, with the motto “No rules for me!”. No economic rules, no parliamentary rules, no established conventions, no guarantees of anything but the law of the Jungle, comprising mainly of ambush for the unaware as in Campbell Newmann’s election without policies.
    The survival of the fittest?
    Is this why the Yanks want to hold on to their weapons?
    Sorry for being broadly philosophical on the subject.

  131. Hamis Hill

    Given the ubiquity and complexity of the issues, would it not be better if the public took their guidance and wisdom from the Philosophers of the Enlightenment rather than those subsequently narrowed in their knowledge to the specialisation of economics?
    Surely it was such as these economists who induced George Bernard Shaw to remark a century or so ago that: “the specialist, is in the truest sense, an idiot”.
    All specialists, following Smith’s arguments, are busilly creating a monopoly supply of whatever goods or services they wish to render to the public inorder to sustain themselves.(At a higher price reflecting higher value?)
    It falls to a position of ownership and control of a entire field of knowledge, with dire results for poachers and tresspassers into the economic domain, and indeed those other citizens excluded from its Sylvan groves.
    This is unsustainable, as might be shown by the example of one of the Four International Principles of The Greens Parties : Economic and Social Justice.
    The conjuction of “social and economic” has the implication that society must understand economics in order for justice to prevail.
    Economists stand in the way of greater and wider public understanding of their critical, specialised fields and arguably, the Enlightenment Philosophers did not so block knowledge and so perhaps it is past time for them to be ressurected into the public understanding.
    That would be progressive, like The Greens.

  132. David Hand

    Doctor.
    I think I get what you are thinking – that if we are to be more affluent, our wages should rise and will stay approximately in line with historical levels – or even grow. If so, I think the answer may be that the economy has changed radically and many more people make their money through other channels than wages.

    There are many more businesses and service providers today than there used to be. In 1970, large corporations employed tens of thousands of people to do everything. Today, most businesses outsource non core work to outside suppliers. Say I’m an engineering firm and I used to do my own safety training. To improve safety I may contract that work out to specialists. My wage bill goes down and I pay an invoice to “ACME trainers”. Acme may be a small business made up of half a dozen of my ex employees who now specialise in safety. They may choose to pay themselves through dividends or profit share.

    Then there’s the whole story of capital. Say I run a concreting business. I own 4 of those concrete mixer barrels. I employ 2 blokes on each to shovel in cement, water and gravel to pour foundations for houses.

    Then someone invents a large scale concrete system, with a great big barrel on the back of a truck and the mix automatically poured in using computers and sensors. Now I only need two blokes, one on the truck and one at the depot to pour 10 times the amount of concrete I used to. My wage bill goes down and my revenue goes up. But I still need to pay off that $250k loan I took to buy the truck and the $500k I borrowed to set up the depot. That money is known as capital or debt.

    Therefore in my business, wages share of my “pie” has gone down. My two workers earn twice as much as they used to. My customers get cheaper concrete. With the money they save from my cheaper concrete, they eat out more. My redundant workers get jobs in restaurants. Or in an airline as my newly affluent concrete buyers go on a holiday they would not otherwise take.

    Multiply this across thousands of businesses and millions of people and you have the australian economy. Where most people are better off than they were 30 years ago.

    Or to put it in macro economic terms, if our economy grows quicker than the population, we are more affluent even though wages as a percentage of the “pie” has gone down. Where’s the rest of the money gone? Maybe into a beachside condo in Acapulco owned by a captain of industry. But maybe into your super. Or into the profit of the cafe that opened last week in my street. Or into the bank account of that bloke who looks after my website. Probably not as wages.

  133. Lyn Gain

    Jimmy, Please accept my apologies. It was David Hand not you who said ‘If you can’t live on the dole, get a job or an education. If you are not capable of either, you should be on a different social welfare benefit.’

  134. drsmithy

    Given the long period of low unemployment we are currently still enjoying why do you think trained people would lack opportunities?

    “Past performance is no guarantee of future returns.”

    The economy is slowing. Job advertisements are way down. Underemployment is increasing. Companies are downsizing (if not folding completely).

    Yes, I think the employment opportunities for everyone in the near to medium term are pretty gloomy.

    And further to my housing affordability point, it isn’t just house price in comparison to rent, but comparing what you get in the capital cities with what you get in the regions taking into account any wage change.

    The fundamental factor is housing cost in relation to income. What’s the median income in your town ? What’s the median house price ?

    For most positions, especially skilled jobs, including teachers, nurses, Doctors and trades the wage opportunities are very similar, so if people are struggling to make ends meet in Melb why don’t they decide to make the move?

    Because there aren’t any jobs ?

  135. Jimmy

    Dr Smithy Given the long period of low unemployment we are currently still enjoying why do you think trained people would lack opportunities?

    And further to my housing affordability point, it isn’t just house price in comparison to rent, but comparing what you get in the capital cities with what you get in the regions taking into account any wage change. For most positions, especially skilled jobs, including teachers, nurses, Doctors and trades the wage opportunities are very similar, so if people are struggling to make ends meet in Melb why don’t they decide to make the move?

  136. drsmithy

    Australians don’t even have to pay insurance to get the dole.

    Yes they do, it’s just that insurance payment isn’t itemised on their payslips.

    The government could focus on skills training policy to provide the unemployed better opportunity […]

    That’s assuming there are opportunities out there for them to take advantage of.

  137. Hamis Hill

    Three posts in moderation there Crikey, doesnot do much to keep a very interesting “Kettle” of discussion boiling along.

  138. drsmithy

    Yes. Labour as an input to production has fallen steadily in the past 50 years. It began with manufacturing in the 50s and 60s and then into services as technology applications emerged in the 90s and 00s.

    That doesn’t explain why it held quite steady through the ’90s, nor why it trended upwards in the ’60s.

    I’m also rather sceptical of the suggestion that just because workers are more efficient and productive, that justifies them as a whole receive a smaller piece of the pie.

    I am amazed you need me to explain this in such detail. Wake up and smell the coffee mate. The world has radically changed in the past 50 years and the internet has only just begun its radical impact on our way of life. For the better. And labour productivity has been a vital enabler.

    So why does that justifiy labour as a whole receiving less than it has in the past ?

  139. Mina

    FelineCyclist

    In Canada and Germany, people have to pay insurance to get the dole and get $15 per day, that leaves them about a couple of dollars extra per day assuming their governments cover all rent and bills. So that means it’s basically subsisting but people get on with their lives, look up do what they can and pick themselves up.

    Australians don’t even have to pay insurance to get the dole. It may be a bit low and not a luxury to live on but there is an campaign of overboard complaining I’ve read on the ABC website recently, many of the complaints also make inaccurate claims about Centrelink payments, eligibility criteria and their staff. My sister works for Centrelink and I have observed the staff, they are very polite and helpful. There could be the odd ones out somewhere but that does not represent the whole organisation.

    There needs to be a balance in the discussion, yes it can be tough for those less fortunate but people should focus on strength as well, don’t just keep going on the victim mentality. The government could focus on skills training policy to provide the unemployed better opportunity, and could raise the dole a bit higher but the dole is not as bad as many people make it out to be.

  140. Hamis Hill

    Donot mention Rome on the weekend or you will be moderated.

  141. Hamis Hill

    The game of Monopoly teaches everyone something about the economy, though the realisation might occur many years later in adulthood.
    Good to see that a poster has learned to buy cheap in the country and get paid the government subsidised rent levels found in the city.
    Winning at monopoly seemd to depend upon getting hotels into slums whereupon the “rents’ bankrupted the rest of the players leaving the final result of all monopolies, one person with all the assets and everyone else in the gutter, an inevitable destruction of the economy in the absence of competition.
    That Old Moral Philosopher whose name seems to set of the moderator observed that it was necessary for wages to be high in order for labour saving devices to be sought for and employed and the reason that this had not happened in the ancient civilisations was that slaves do not have high wages, so why replace them, silly!
    The example being given by the Celts in Northern Gaul using their own horse drawn wheat reaping machines while in the latifundia of Italy slaves did the same work.
    Highly productive workers such as Blacksmiths were scarce in rome, where like the present conservative regimes they seem to have lost the plot on producing key tradespeople.
    roman merchants visiting Britannia, pre-conquest, were amazed that every village had a blacksmith.
    Posing the philosophical question, why was it so, which as we can see from some posts is not easily answered by the nerdish pronouncements of economics.
    But the message that there is a problem when machines replace labour and the consumers do not have the wherewithall to purchase the production of the machines is beginning to include the prognosis of that game of monopoly, ending in tears.
    Conservatives might imagine themselves insulated by ramparts of gold from any dire consequenses but perhaps they should remember that it was the Junker Count Otto Von Bismark who unified Germany against the opposition of Austria and who introduced the first welfare system aguing, after seeing the results of the 1848 depression, that people theatened with starvation were likely to go on a vengeful rampage of property destruction before they died, and that some sort of “Social Secutity” might avoid this result.
    Be nice to your dole bludgers, even go so far as to give them the dignity of gainful employment as in “Protestant Work Ethic” Switzerland, or the Scandinavian countries.
    Remember “Thor” wielded a hammer and there were workshops in the Valhalla.
    If Bismark had lived to advise Kaiser Bill then perhaps 60,000 Assies would not have died in WWI, because there is no way Germany would then have gone to war for the religiously demented imperialism of the Austrians. Who said economics is boring.

  142. Jimmy

    Lynn gain I never said if you can’t live on the dole get a job

    And as for house prices I own a house in a place called Timboon, while it is now worth much more than I bought it for I rent it out for$260 a week but could sell it for about$230 k, 3 bdr, 2 bath.

    The hose I live in is in the nearest regional centre and could be rented for about $300 a week and sold for around$290k, both cases much less than they current repayments

    DrSmithy while I acknowledge thsavings rate is a good thing I don’t expect it to stay this high for too much longer.

    And as for not having a solution, doesn’t that just make you a whinged, happy to point out the problem but not do anything about it.

    As for the influence of unions, look what I said way back at the start about the Us issues.

  143. Ian

    On the question of the free market. Nearly all the markets in Australia are rigged in one way or another and this, like inequality, is largely because of the concentration of power in the hands of just a few corporations.

    For example maybe we would benefit from the high dollar and consequent cheaper imports if on say groceries we had lots of suppliers supplying lots of retailers supplying lots of consumers. We don’t.

    On the falling share of labour as against profits – I see lots of reasons:- 1)Increased power of corporations including the power to unduly influence (read corrupt) government, 2)outsourcing of higher paid manufacturing jobs, 3) successful attack and co-option of union leadership by the government in support of the corporations, 4) undervaluing of professions such as nurses, teachers and childcare workers etc whose work is not primarily to do with the business of making money, 5)turning labour in general into a variable cost by substituting permanent with temporary or contract workers and 6)privatization of strategic assets and inherent monopolies. I have probably missed a number of other factors but we make a mistake if we see these changes as something we had or have no power to remedy.

  144. David Hand

    Doctor,
    Yes. Labour as an input to production has fallen steadily in the past 50 years. It began with manufacturing in the 50s and 60s and then into services as technology applications emerged in the 90s and 00s.

    According to the Productivity commission Trends paper, in 2009 labour productivity was 278% of what it was in 1964. I calculated this by taking the annual productivity increase reported in the table and compounding it against a base as at 1964.

    Look around you. Notice those ATMs? Remember when you had to queue in a mad rush at 4pm on a Friday in order to have cash on the weekend?
    Have you bought an airline ticket in the past 5 years?
    Do you self-check out at the supermarket?
    Have you noticed those barcode thingys on every item you buy?
    Have you been on a factory floor this century? Any idea what factory floors looked like in 1970?
    So if a supermarket no longer employs people to put little price stickers on every item and if the checkout people just wave a product over a sensor rather than punch each individual price into the cash register, their labour content of providing a service to customers goes down.

    Labour productivity goes up, the labour input to products and services goes down. Goods and services get cheaper in real terms. People divert their spending to other things. New industries are created. Like the internet. Like Jetstar. Like the explosion in eateries, coffee shops and restaurants. Like computer games. Like pay TV. Like Ipads. Like SUVs. Like the rugby world cup. Like viagra. Like gastric bands. Like lawn mowing services.

    I am amazed you need me to explain this in such detail. Wake up and smell the coffee mate. The world has radically changed in the past 50 years and the internet has only just begun its radical impact on our way of life. For the better. And labour productivity has been a vital enabler.

  145. CML

    I’m with Lyn Gain. Have really enjoyed reading what you have all had to say on this thread. I only have a very basic understanding of economics so it has been quite instructive trying to follow the various opinions.
    And all without any nasty comments to speak of. Thanks everyone!

  146. drsmithy

    I wouldn’t expect a class warrior such as yourself

    […]

    You must still be grieving the fall of the Berlin Wall, mate.

    Please. If you’re going to ad hominem, at least make it interesting or funny (and relevant).

    a) Capital investment, particularly in technology has reduced the labour content of many products and services. It’s called multi-factor productivity and there is quite a lot of angst among economists and policy makers that it is not rising fast enough to sustain Australia’s standard of living. When multi-factor productivity rises, real prices fall, labour input costs are lower and we are generally better off.

    So your argument is that capital investment is substantially higher today than it has been in the past and therefore capital deserves a bigger share than it has historically had ? Do you have some numbers to go with that ?

    b) Australians have about $1trillion invested in super that wasn’t there 20 years ago, so most Australians, including probably yourself, have a stake in the investment side of the economy.

    Not quite sure what your point is here. Do the companies all this money is invested in not employ people ?

  147. David Hand

    Starling starling,
    Let me make sure I understand what you have said.

    You are unwilling to undertake a lab tech course, which would make you more employable, because it would jeopardise your disability support pension. Is that what you are saying?

  148. David Hand

    Doctor,
    I wouldn’t expect a class warrior such as yourself to notice but labour as a percentage of the nation’s wealth production may have fallen because-

    a) Capital investment, particularly in technology has reduced the labour content of many products and services. It’s called multi-factor productivity and there is quite a lot of angst among economists and policy makers that it is not rising fast enough to sustain Australia’s standard of living. When multi-factor productivity rises, real prices fall, labour input costs are lower and we are generally better off.

    b) Australians have about $1trillion invested in super that wasn’t there 20 years ago, so most Australians, including probably yourself, have a stake in the investment side of the economy.

    You must still be grieving the fall of the Berlin Wall, mate.

  149. Hamis Hill

    Somewhat easier to consume than The Wealth of Nations was the “Teach Yourself Management” book produced, originally, for wartime conditions.
    Must have been a reasonable exercise in teaching economics, considering the final result of that war.
    By way of introduction it described how cottagers would turn raw materials into goods and then take these goods to the Saturday market.
    A manager, or more accurately entrepreneur, arose who relieved the burden upon the cottager industrialists by, on a travelling circuit, delivering raw materials from the market to the cottagers and taking their finished goods to the market to be sold.
    A sort of symbiosis of wealth creation, with mutual dependence between the “managers” and the workers.
    Inevitably this happy balance was broken when financiers intervened and turned the manager, via loans, into a procruer of interest payments on the borrowed financial capital.
    No doubt, as with David Humes’ “Amalgamation and Capital” the title of an episode in the Deadwood TV series, economies of scale accrued which drove out the smaller enterprises, but the point was that, before the subversion, the original wealth creating circumstances were a partnership between “management and workers”.
    The climate for wage exploitation arose then when the sharing of profits between maanagement and labour was changed to the exploitation of labour for the return on external capital, with shareholders being the first concern of management, when, perhaps it should be the partnership of labour and amanagement, which only now occurs in co-operatives or the self-financing German industry model.
    Housing co-operatives spring to mind, perhaps a source of both housing and employment for the long-term unemployed.
    At least at the end of the process they will be able to work for lower wages and be more employable, without a reduction in their standards of living, having escaped, to an extent, mortgage slavery.

  150. Lyn Gain

    I have been thoroughly enjoying this brisk and generally polite exchange of views (although there were a couple of times when the politeness almost broke down). Two things:
    @Jimmy “If you can’t live on the dole, get a job or an education. If you are not capable of either, you should be on a different social welfare benefit.” It’s not the people on benefits you need to tell that to, it’s the Government and the social security system, viz, the sole parents that just got moved to Newstart from parenting payments, the people with disabilities that got moved a while back to Newstart from the disability pension.
    @Jimmy ‘That should be “Australian capital city housing” – have a look around regional Australia and you’ll find housing that is very affordable.’ I too live in regional Australia (in a rural area). 17 years ago we paid $140,000 for a property that we could now sell for $550,000. The increase in prices is not as great as in the city, but it certainly results in unaffordable housing in areas characterised by lack of paid work.

  151. Hamis Hill

    I would have thought that if people are making a return on their investments, creating wealth through the application of labour to their raw materials, then what is the problem in paying for that labour?
    It is only a problem when someone selling the same goods with a lower wages bill sells for a lower price squeezing the profits of the original enterprise.
    This might be where massively expanding wages will destroy the enterprise.
    If wages increased and the value of the dollar in those wages fell then those million dollar cottages might halve their value while at the same time becoming more affordable???
    The more non-nationals who hold local dollars without any local involvement the less inclined they will be to hold onto decreasing dollars, or alternatively the more inclined they might be to act to keep the value of those dollars high.
    Devaluation would help industry create wealth but those who already have wealth may not be very interested.
    There is the conflict of interest, with the wealthy, which is certainly not the deluded mortgage slaves, having the upper hand.
    Bashing a few dole bludgers tends to make the mortgage slaves happier with their lot and more inclined to support and vote for execrables like Abbott. Eh Jimmy?
    As others have said in a true free market the Banks would have already been declared bankrupt and the recovery would be underway.

  152. Liz45

    The Govt cut off sole parents and put them on Newstart as a cost cutting exercise. If they’re fair dinkum about saving money they should go after the rich bastards who don’t pay their tax – this amounts to BILLIONS of dollars each year. It’s ironic that the Govt went public with this ‘cost cutting measure’ on the same day as the PM’s speech in Parlt about sexism. This activity has just thrown sole parents (mostly women) on to the pile of survivors in this so called rich country? A disgrace!
    Oh yes, thanks to Howard’s ‘charity’ to the middle class and above, there are millionaires receiving the pension and family benefits! They could tidy that up too!

  153. Hamis Hill

    House prices in the Bush have been overpriced since the early seventies when people complained that when selling up to move to the Capital cities they could buy a house for the same price at which they sold.
    So prices wenr upt o the lowest city prices.
    The problem was, however, that the prices were low because jobs were short and wages were low so country residences became overpriced and relatively unaffordable.
    Just part of the general “get Big or Getout rural decine overseen by the Li[beral infiltrated Country party whci changed its name to National.
    Add in the National Party control of the local presses and the overall drift into decline continues.
    It is no wonder that the voters a finally turning to the Independents to represent them.

  154. drsmithy

    On what basis do you make that statement, I live in regional Australia and I can tell you there are plenty of good houses reasonably priced.

    Where do you live that the local median multiplier is 3 or less ? Where do you live that it’s cheaper to buy than rent ?

    The same question was probably asked about what would happen when foreigners stopped wanting our wool. And my point is that we have had prolonged good real wages growth (in contrast to America) which is creating that internal demand (or at least it will again when savings rates come back off historical high levels).

    “Come back off” ? WTF are you on !? Savings rates are finally returning to NORMAL after a decade or so of historically LOW levels and reckless spending.

    If this problem does exist what do you propose is done to fix it?

    Like I said, I don’t claim to be an expert.

    I do note that it’s come hand in hand with the reduction in worker’s rights (and unionism rates) over the last few decades, so that probably gives some indication of possible remedies.

  155. Paul Barry

    Wow, you people are having a big discussion here. I better get out. Have fun!

  156. Jimmy

    Dr SMithy – “You seem to be missing the fundamental point here.
    The problem is that the people paying the wages, are doing so at a proportionally reducing rate, even as they are making more and more money. They are pocketing the difference themselves and thus the capital share of profit is increasing while the labour share is decreasing.” The point you are missing is that “they” aren’t universal, the they making more and more money in Australia at the moment are the mining sector (you yourself say “Most of the Australian economy currently revolves around selling dirt to China”) and the “workers” in that field on getting paid a very good sum, but you can’t apply that across the whole economy.

    “Only if they keep producing at the same level.” Farmers aren’t going to let land lay idle.

    “I am. What we are seeing in Australia is exactly what has happened in the rest of the western world.” NO it isn’t, just look at our wages growth compared to the US for the last 40 years to see how wrong that statement is.

  157. Phen

    Never mind the economic debates – why did First Dog lie? 😉

  158. Paul Barry

    So New Zealanders don’t have to pay unemployment insurance either whereas employees in the UK, Canada, Germany and the US have to pay to be insured against unemployment.

    Australia stacks up reasonably well.

  159. drsmithy

    The reason massive wage increases (similar to the increases in wealth generated by the mining magnates) is unsustainable because someone has to pay those wages, and the people who pay those wages have to risk their capital to do it.

    You seem to be missing the fundamental point here.

    The problem is that the people paying the wages, are doing so at a proportionally reducing rate, even as they are making more and more money. They are pocketing the difference themselves and thus the capital share of profit is increasing while the labour share is decreasing.

    No-one is asking the *cough* “wealth creators” to give up proportionally more of their wealth than they have in the past. We’re complaining because they are steadily reducing the amount they are giving up, and keeping the rest for themselves.

    Let’s put this in simple terms.

    If a couple of decades ago the whole pie was 100 wealths, back then labour got ~55 wealths and capital got ~25.

    Today the whole pie is 1000 wealths. But now labour is getting ~520 wealths and capital is getting ~280.

    Capital is keeping more of the pie for itself than it was in the past. You seem to think this is ok. Why ? What has changed that they deserve more than they got in the past ?

    it’s not just that they make exports more expensive but it effectively drops the price of the same product on the domestic market, if our farm produce is too expensive internationally an over supply causes the price to drop making it cheaper for domestic consumers.

    Only if they keep producing at the same level.

    In reality, right now we have had consistent real wages growth, low inflation, low interest rates, low unemployment and solid GDP growth for a sustained period and now we have a high dollar which while impacting exporting businesses is keeping prices lower – no one is going backwards just some are going forward faster.

    Many people are going backwards. These are people whose incomes have not risen at the same pace as their cost of living.

    “Forward” is a relative measure, not an absolute one.

    You don’t need a crystal ball, if it cost more in Australian dollars to buy something for the wholesaler it will cost more for the consumer.

    Only if nothing else changes. An assumption which is, of course, ridiculous.

    Firstly I am not talking “worldwide” I am talking about Australia and in Australia the minerals boom has been the biggest change as I have mentioned numerous times.

    I am. What we are seeing in Australia is exactly what has happened in the rest of the western world. Huge increases in productivity and wealth, but with an ever-shrinking share of it going to labour. It’s more dramatic in some countries compared to others (ie: USA), but the pattern is the same.

  160. Jimmy

    Dr SMithy – “No you won’t. The real estate bubble has been Australia-wide.
    You might find the odd pocket here and there where prices have begun to correct, but as a general rule real estate is ridiculously overpriced everywhere you go.” On what basis do you make that statement, I live in regional Australia and I can tell you there are plenty of good houses reasonably priced.

    “Most of the Australian economy currently revolves around selling dirt to China and swapping houses with each other using money borrowed from foreigners. When China’s demand for dirt slows or stops, and foreigners will no longer give us money to buy each other’s houses, what do you think we’re going to use to generate “internal demand” ?” The same question was probably asked about what would happen when foreigners stopped wanting our wool. And my point is that we have had prolonged good real wages growth (in contrast to America) which is creating that internal demand (or at least it will again when savings rates come back off historical high levels).

    ” The problem that’s being highlighted is that wage growth has NOT increased in line with the growth of the rest of the economy, because capital is sucking up a growing proportion of wealth than it has in the past.” If this problem does exist what do you propose is done to fix it?

  161. drsmithy

    One of the contemporary economists who have got it right regarding the current world crisis and the way economies really work is Australia’s own Steve Keen. If you are an economist and don’t already know of his theory it is worth googling him and listening to what he has to say.

    I read or listen to Keen’s work probably about once a week.

  162. drsmithy

    So you are looking for examples of our high exchange rate making imports cheaper? Particularly groceries?

    The supermarket duopoly is importing container loads of food from Asia and selling them as those super-cheap home brand products, driving the cost of groceries down for the average consumer.
    Grocery costs skyrocketed over the last decade. Far more than inflation.

    There is no question that motor vehicles are cheaper in real terms than they have ever been.

    Indeed, but that’s not the point being made.

    The point being made is that (most) cars in Australia cost dramatically more than they do overseas, despite the “logic” that our strong dollar should, in fact, be making them relatively cheap. This is more true for some brands than others, but is generally true across the board.

    That’s why Ford is stopping production of the Falcon and Holden is stopping the Commadore. It’s why Australian car manufacturers cannot compete without heavy government subsidies.

    It’s not out strong dollar killing local car manufacturers (though it’s certainly contributnig), it’s their horrendously low productivity and the fact they’re building cars no-one wants to buy anymore.

    Doctor, your Adam Smith quotes describe our market economy quite well. As Jimmy says, the invisible hand of the market is working on housing as we speak, reducing proces in absolute terms at the moment and in real terms over time. Baby boomers will need cashed up customers when they want to unload their expensive properties and as you are all teary eyed about gen Y not having the means, prices must inevitable continue to fall.

    Yeah, such a pity about the generation they’ve condemned to debt slavery in the interim, and the incredibly depressive effect that loss of disposable income will have on the economy as a whole for the next few decades.

    If you can’t live on the dole, get a job or an education. If you are not capable of either, you should be on a different social welfare benefit.

    The first assumes there are jobs. The second assumes easy accessibility to all the supporting infrastructure someone needs to be educated.

    Unemployment in the US (and other countries) is not high because of people unable or unwilling to work, despite sadistic neoliberal fantasies that the only people on the dole are the lazy and incompetent.

  163. Hamis Hill

    Jimmy a couple of responses, not necessarily polite ones, in moderation.

  164. Hamis Hill

    Now, now Jimmy, what happened with Ford’s famous five dollar day was that the workers over at Buick, where they made cars for rich people which they could not afford to buy themselves, all in a free market phenomenon went over to work for Ford.
    In order to keep their workers Buick raised their wages and those workers could now afford to buy Fords.
    Ford gave them an Affordable car and was rewarded with their custom.
    A superficial comparison to the unaffordable,, corruption ridden Australian housing market?
    Here you’ll get an unaffordable house and damn you if you ask for something better.
    This magical world where fast growing wages destroy the economy but where we do not have exhorbitant interest rates equally destroying the economy.
    One other thing you cannot seriously argue is,that because you live in the twenty first century you have, as per a birthright, acquired a better understanding of matters economic than Adam Smith.
    Manifested as believing that conservatives will always be better economic managers?
    Sounds like that “Post Modern” drivel spouted by people who never understood the deinitions of modernity established by the Philosophers of the Enlightenment.
    Universal numeracy and literacy were the prerequisites, Taken a bit of a pounding under conservative rule, have they not?
    Especially as applied to this debate, where we seem to be in the pre-modern era from which many now prominent New Australians have risen to inflict their standards on the rest of us.
    I give you “Greed is Good” as their moral foundation as they rush to tug their servile forelocks to their “Betters” while sneering at the ordinary, easy going descendants of thse who gave us the Eight hour day, the living wage and Ballot Box democracy.
    I suspect that here in the 1800’s the understanding of Adam Smith was greater than your own, and that standards have sadly declined in the last century or so, to the point where such as your self cannot presume to have a superior understanding, especially in the absence of any proper study of the subject, now deemed redundant?
    I’m sure the enemies of progress are applauding the success of their desires for a servile population of ignoramuses. A variation on Marx’s “useful idiots”, in this case arguing for their own destruction, against all attempts at enlightenment?

  165. drsmithy

    That should be “Australian capital city housing” – have a look around regional Australia and you’ll find housing that is very affordable.

    No you won’t. The real estate bubble has been Australia-wide.

    You might find the odd pocket here and there where prices have begun to correct, but as a general rule real estate is ridiculously overpriced everywhere you go. You’d struggle to find _anywhere_ in the country where buying is cheaper than renting, and in large swathes of it, renting is ca. 1/2 to 2/3 the price of buying.

    And as I said earlier housing has been undergoing a correction for the past few years and looks set to continue that correction while real wages continue to grow.

    So ?

    On your original point the US is a prime example of where failing to grow wages has lead to and economy unable to sustain itself through internal demand but we have not had that experience, while the US wages have flat lined for 40 years we have had good real wages growth.
    Most of the Australian economy currently revolves around selling dirt to China and swapping houses with each other using money borrowed from foreigners. When China’s demand for dirt slows or stops, and foreigners will no longer give us money to buy each other’s houses, what do you think we’re going to use to generate “internal demand” ?

    And you can not deny the dangers of wages growing too fast, why didn’t Ford make it a $10 day or a $20 day?
    Ignoring that whatever Ford was paying his employees is utterly irrelevant, wage growth when the rest of the economy is growing as well is fine. Indeed, that’s the whole point of growing the economy. The problem that’s being highlighted is that wage growth has NOT increased in line with the growth of the rest of the economy, because capital is sucking up a growing proportion of wealth than it has in the past.

  166. Hamis Hill

    Jimmy,those FIFO mining workers seek their primary accommodation where they find it.
    The market is obviously not responding to their increased capacity to pay by increasing, affordably, the amount of housing, otherwise the rents would not be rising to the levels of which you rightfully complain.
    My direct observation is of an open-cut coal mine in the Upper Hunter Valley where the Singleton shire council did not respond adequately to the imminent increase in population of relatively highly paid miners, by supplying more residential land, and as a result 75 year old ramshackle housing in the town was fetching double the price of the least expensive new home in Sydney.
    Speculator Heaven, care of insider knowledge about the government approval process.
    The National party was all over this, as it was when cotton came to the northern inland NSW rivers and shock horror, where were all the new houses for all the new workers?
    I’ll state it again, there is no free-market in housing.
    And Smith showed where the “dead hand of the bureaucracy” lay across and impeded the levers which needed to be moved to respond to changed conditions.
    It is a fix , a scam, an insider trading paradise infested with the Right Wing, easy-money and essentially criminal elements of all the major political parties.
    This is corruption on an oriental scale, dominated mainly by get rich migrant cliques with nothing but withering contempt for the democratic standards and ideals of former Australian generations, and seeking to impose those ugly standards that still condemn their home countries to the backwardness and squalour left behind centuries ago in the Anglo-sphere. IMHO.

  167. Jimmy

    Hamis Hill – Sorry I didn’t realise the great Smith (or at least your intrepretation of him) was infallable!!

    “A general point is that most foreign observers rate Australian housing as unaffordable for the level of wages in the economy.” That should be “Australian capital city housing” – have a look around regional Australia and you’ll find housing that is very affordable.

    And as I said earlier housing has been undergoing a correction for the past few years and looks set to continue that correction while real wages continue to grow.

    Plus there are other remedies than either letting the correction take it’s course or simply jacking up wages, maybe release more land or increase housing density.

    On your original point the US is a prime example of where failing to grow wages has lead to and economy unable to sustain itself through internal demand but we have not had that experience, while the US wages have flat lined for 40 years we have had good real wages growth.

    And you can not deny the dangers of wages growing too fast, why didn’t Ford make it a $10 day or a $20 day?

  168. Hamis Hill

    Now, prima facie, before you start limiting the arguments of the father of economics, please explain how you acquired your superior understanding( a rhetorical question, you do not have a superior understanding to Smith in matters economic)
    A general point is that most foreign observers rate Australian housing as unaffordable for the level of wages in the economy.
    And that further,housing prices would have to stabilise in order for productivity? based wage rises to eventually catch up and that this would take several years so extreme was the distortion and dangerous the circumstances to attempt a quicker solution.
    A distortion which seems to extend to your arguments, unfortunately for the rest of the posters in this discussion.

  169. Jimmy

    Hamis – The concepts you discuss have their limitations.

    For example BHP did raise wages and what impact has that had on the rest of the economy? It has impacted on the skills shortage by luring people into the high paying mining sector at the expense of the other sectors & it has impacted the housing market in Perth just for starters.
    In my area we have had some big investments in GAS exploration which resulted in rents going through the roof.

    In general I would suggest dramatic wage increases work for the economy in a low income environment (see the expanding middle class in China and other parts of Asia) but don’t necessarily work in an environment where wages are already relatively high like Australia.

  170. Hamis Hill

    That famous Moral Philosopher clearly stated the conditions under which a free-market would operate.
    He was not so religious on the matter as to faithfully believe, as some here do, that a free-market actually exists.
    Suffice it to say that there is no “free-market in housing.
    The Majority of mortgages are majority owned by the lenders and, it is reasonable for them act to maintain the high prices of their holdings. But they act as a Cartel in doing so.
    In these circumstances there is no free-market competition in housing in Australia, with the existing cartel, without let or hindrance, setting prices to suit thenselves.
    And if there were any democratic opposition to this monopoly available in the form of local government then that is easily subverted by the vested interests.
    Smith writes widely on wages, profits and interest rates and his example of high wages in the North American colonies indicate that high wages were indeed sustainable but higher levels of savings meant high interest rates could not be sustained.
    Ergo, high wages-low interest rates, low wages-high interest rates,and with the latter, obviously the rich get rich as the poor get poorer. it is as old as The Bible with whole civilisations collapsing under the weight of usury.
    With those who labour for a living being in direct competition with those who, as Smith’s “Idle Rich”, live without effort if not without risk, from interest paid on their lendings.
    These are not to be confused with those who directly risk their capital on enterprises like mining and who seek to reward these investments with profits on top of rewarding out of those profits the labours of their employees.
    The payment of interest on any borrowed money must come out of the profits and this is where high interest payments come at the expense of wages if profits are to be sustained.
    German industry is self funding and does not have to share its profits with lenders.
    As Smith expounded, and Ford followed with his famous five dollar day , a doubling of his workers wages, the wages created a extended market for Ford’s cars and “returned” when his workers acquired the products of their own labours.
    Where on Earth does sustainability come into this picture?
    Some decades ago BHP went against the clamour for lower wages, understanding , as all employers do that, inorder for manufactures to be consumed, the consumers must have an income.
    Only a very, un-philosophical greed is blind to this reality.

  171. Jimmy

    Dr Smithy – The reason massive wage increases (similar to the increases in wealth generated by the mining magnates) is unsustainable because someone has to pay those wages, and the people who pay those wages have to risk their capital to do it. If they are get the required return on their capital to justify the risk and pay the inflated wages then the price they charge for the goods has to increase, this drives inflation, which then cause govt’s to cut spending and the RBA to push up interest rates, all of which would lead to people such as yourself complaining that “cost of living pressures” are too high and we need a wage increase to counter it.

    “I never said a high exchange rate doesn’t make exports more expensive” it’s not just that they make exports more expensive but it effectively drops the price of the same product on the domestic market, if our farm produce is too expensive internationally an over supply causes the price to drop making it cheaper for domestic consumers.

    “The example is absurd because a) it’s unearned windfall not productivity improvements and b) it’s a comparison between two people, not across an entire economy.” What do you call the massive increase in Iron Ore prices that has been the biggest driver of the increase in the riches wealth if not a “windfall”. And The point is you can still be growing your wealth significantly but still going backwards when compared to someone else, the same can be said for the “workers” and the “wealthy”.

    “You seem to enjoy supposition and speculation. I assume that’s because it’s more convenient to your worldview to wonder about how things might possibly be in different circumstances, rather than look at how they actually are in reality, right now.” In reality, right now we have had consistent real wages growth, low inflation, low interest rates, low unemployment and solid GDP growth for a sustained period and now we have a high dollar which while impacting exporting businesses is keeping prices lower – no one is going backwards just some are going forward faster.

    “Again What would the price be if the currency was lower?
    I don’t know because my crystal ball is broken.” You don’t need a crystal ball, if it cost more in Australian dollars to buy something for the wholesaler it will cost more for the consumer.

    “Can you outline what about this dynamic has changed (worldwide) in the last few decades to justify the shift in profit share away from labour ?” Firstly I am not talking “worldwide” I am talking about Australia and in Australia the minerals boom has been the biggest change as I have mentioned numerous times.

  172. starling starling

    Personally, I cannot understand why the welfare system hasn’t moved into an emphasis on skills training subsidies; this would include such things are licence training subsidies (including class c) and various trade and labor tickets. As a recipient of DSP I am generally not badgered by centrelink, but imagine my surprise when I was advised not to approach stream assistance JBN providers inasmuch as this would jeopardize my DSP payment. I had wanted to complete a simple lab tech course. Anyway.

    Anybody who thinks the scandinavian welfare model isn’t vastly superior to our own is frankly misinformed or deluded. In fact the entire Ideology socio-political model of the region is much, much better. Could it work in Australia? I suspect not, due to profound cultural and ideological differences. We are not ready for democratic socialism in this country; we, like the US, have not evolved beyond Liberal Capitalism and fractional banking, which, incidently hasn’t worked out to well,is killing the Earth, and many of the people on it, and has inevitably resulted in economic collapse everywhere it has been in operation, without variation. This is something that is actually built into the system–I don’t want to get into it, but it all has to do with money supply and inflation.

    Would I be happy to pay fifty cents tax on the dollar to live in a society with largely free social services, including medical, dental care, and transport? Absolutely. Hell, maybe I’d even feel as though I were contributing something–might even make the idea of good society worth fighting for, might give me an incentive to give a shit. It might give society, which is a abstract commodity rarely considered by my fellow lackwit countrymen, a value–both a dollar value (which is the only thing joe the plumber undertands) and an ideological or dare I say it, an ethical value.

    Do you ever get the feeling you’re just making other people rich, or that the entirety of your life time, your time under the stars, is converted into work time to fund a paltry life that wouldn’t be your pick, if you had one? Have you ever been on a train, and wondered why, for example, we have police checking tickets–that is, acting as the go-to enforcement agency of private enterprise?

  173. Ian

    @drsmithy (71)

    Adam Smith, like Maynard Keynes are much misquoted economist/thinkers.

    One of the contemporary economists who have got it right regarding the current world crisis and the way economies really work is Australia’s own Steve Keen. If you are an economist and don’t already know of his theory it is worth googling him and listening to what he has to say.

  174. drsmithy

    Again What would the price be if the currency was lower?

    I don’t know because my crystal ball is broken.

    What I will tell you is that (were it not for import laws) I could fly to the UK, buy a BMW 335i and have it shipped to Australia, and still have paid ca. 2/3 the price of buying the exact same car locally.

    I could buy a nice Weber BBQ from the USA, spend $300-odd shipping it to Australia, and still have only paid a little more than half the cost of buying it locally.

    Etc, etc.

    You seem to enjoy supposition and speculation. I assume that’s because it’s more convenient to your worldview to wonder about how things might possibly be in different circumstances, rather than look at how they actually are in reality, right now.

    True but if they were down on struggle st would they still be prepared to make the purchase?

    Completely irrelevant.

  175. drsmithy

    People who put capital at risk get to enjoy the benefits of that risk just as the get to suffer the downside of that risk. So if the average worker wants to invest his hard earned and take the risk they can get rich at the same rate as the big miners, but to expect wage growth at the same rate is unsustainable – […]

    You still haven’t explained why it’s “unsustainable”.

    Can you outline what about this dynamic has changed (worldwide) in the last few decades to justify the shift in profit share away from labour ?

    […] and if you know half as much about economics as you make out you already know this so stop wasting both of our time asking questions you already know the answer to.

    I’ve never tried to pretend I know anything about economics. All I’m stating are metrics.

    This is not the comparison that should be made, you need to compare what price would be paid if the dollar was lower compared to what price is being paid now.

    It is absolutely the comparison that should be made, because it is the comparison that _can_ be made.

    The comparison you are proposing cannot be made, because there are too many unknown variables.

    No if you redcue both the wholesale price and the markup the result to the consumer is a lower price, it’s basic mathematics.

    A weakening currency will _raise_ the wholesale price of imported goods (though the original foreign vendor may we lower their wholesale pricing as well – again, this is one of the variables that can’t be calculated).

    But again you are misusing figures, just because the “workers” aren’t increasing their wealth by as much as the top end doesn’t mean their wealth isn’t increasing, if you won $100k in tatts and your neighbour won $1m are you worse off than you were before or just worse off than your neighbour?

    The example is absurd because a) it’s unearned windfall not productivity improvements and b) it’s a comparison between two people, not across an entire economy.

    And again “If you could also include how having a high exchange rate doesn’t make our exports more expensive and there fore doesn’t effect demand, which doesn’t impact the price of domestic produce it would be great.”

    I never said a high exchange rate doesn’t make exports more expensive. Further, this obviously does affect demand, which is why most industries that rely on exports are crashing and burning.

  176. Jimmy

    ” Many cars have huge markups here in Australia, thus the high currency demonstrably isn’t helping consumers in that market.” Again What would the price be if the currency was lower?

    “That some people are prepared to pay these exorbitant prices, while a triumph of marketing for the sellers, doesn’t change the fact that those vehicles are absurdly overpriced compared to other countries.” True but if they were down on struggle st would they still be prepared to make the purchase?

  177. Apollo

    True DrSmithy. I don’t know if they will make a 20% deposit compulsory any more, I know that they are a bit stricter since the GFC.

    On the bright side, electronics, computers are cheap and quite affordable to most people and can be upgraded every few years, so too are clothes. But bad in a way because people chuck them out.

    Ok, that’s enough for me on this article. Peace!

  178. David Hand

    So you are looking for examples of our high exchange rate making imports cheaper? Particularly groceries?

    The supermarket duopoly is importing container loads of food from Asia and selling them as those super-cheap home brand products, driving the cost of groceries down for the average consumer.

    I now invite you all to vent your outrage at the evil supermarket corporations driving downtrodden heroic local food producers out of business.

    There is no question that motor vehicles are cheaper in real terms than they have ever been. That’s why Ford is stopping production of the Falcon and Holden is stopping the Commadore. It’s why Australian car manufacturers cannot compete without heavy government subsidies.

    I now invite you all to vent your outrage at evil Asian motor vehicle manufacturers dumping their subsidised vehicles on Australia.

    Doctor, your Adam Smith quotes describe our market economy quite well. As Jimmy says, the invisible hand of the market is working on housing as we speak, reducing proces in absolute terms at the moment and in real terms over time. Baby boomers will need cashed up customers when they want to unload their expensive properties and as you are all teary eyed about gen Y not having the means, prices must inevitable continue to fall.

    If you can’t live on the dole, get a job or an education. If you are not capable of either, you should be on a different social welfare benefit.

  179. drsmithy

    I don’t know Hamis. I have young cousins who bought their homes and started family while they still had HECS debts. The banks normally work out all of your li abilities and how much your income can pay back before setting the loan amount.

    Indeed, and if we travel back in time a couple of decades, they were even doing so responsibly, rather than eagerly saddling households up with debt repayments that suck up 50% of their disposable income.

  180. drsmithy

    I just find it interesting that here we are in a country that according to you and many others on this thread times are getting tougher and tougher but new car sales, the quintessential discretionary spend, are at record highs and that is despite the fact they are 50% more expensive than elsewhere in the world.

    I’m sure there are many reasons why car sales could be high. Here’s one:

    http://www.afr.com/p/national/dealers_jack_up_new_car_sales_ZIpWUPkwsmSdX3tMtimQqJ

    Have a look on carsales and see how many “used” vehicles you can find with <50km on the clock.

    As I said, why the sales numbers are high is irrelevant. Many cars have huge markups here in Australia, thus the high currency demonstrably isn't helping consumers in that market. That some people are prepared to pay these exorbitant prices, while a triumph of marketing for the sellers, doesn't change the fact that those vehicles are absurdly overpriced compared to other countries.

  181. Jimmy

    Apollo – I am with you.

    Dr Smithy – “I am asking you why the rich getting richer is ok, but everyone else getting richer at the same rate is “unsustainable”.” People who put capital at risk get to enjoy the benefits of that risk just as the get to suffer the downside of that risk. So if the average worker wants to invest his hard earned and take the risk they can get rich at the same rate as the big miners, but to expect wage growth at the same rate is unsustainable – and if you know half as much about economics as you make out you already know this so stop wasting both of our time asking questions you already know the answer to.

    “True. They could have just camped out in a field instead.” Or more logically they could have bought/rented a smaller residence, or in a different suburb or God forbid move to regional Australia – people have choices.

    “as even a cursory comparison of prices for simi lar goods in other countries vs locall y shows.” This is not the comparison that should be made, you need to compare what price would be paid if the dollar was lower compared to what price is being paid now.

    ” When the currency drops, the markup will be reduced (albeit much slower than it was originally appl ied) and the difference to the end consumer is basically zero.” No if you redcue both the wholesale price and the markup the result to the consumer is a lower price, it’s basic mathematics.

    ” Decreasing labor share of GDP, welfare payments that haven’t increased to meet rising costs (or even with inflation), GINI trends, increasing wealth gap, etc.”But again you are misusing figures, just because the “workers” aren’t increasing their wealth by as much as the top end doesn’t mean their wealth isn’t increasing, if you won $100k in tatts and your neighbour won $1m are you worse off than you were before or just worse off than your neighbour?

    And again “If you could also include how having a high exchange rate doesn’t make our exports more expensive and there fore doesn’t effect demand, which doesn’t impact the price of domestic produce it would be great.”

  182. Jimmy

    Dr Smithy – “I am asking you why the rich getting richer is ok, but everyone else getting richer at the same rate is “unsustainable”.” People who put capital at risk get to enjoy the benefits of that risk just as the get to suffer the downside of that risk. So if the average worker wants to invest his hard earned and take the risk they can get rich at the same rate as the big miners, but to expect wage growth at the same rate is unsustainable – and if you know half as much about economics as you make out you already know this so stop wasting both of our time asking questions you already know the answer to.

    “True. They could have just camped out in a field instead.” Or more logically they could have bought/rented a smaller residence, or in a different suburb or God forbid move to regional Australia – people have choices.

    “as even a cursory comparison of prices for similar goods in other countries vs locally shows.” This is not the comparison that should be made, you need to compare what price would be paid if the dollar was lower compared to what price is being paid now.

    ” When the currency drops, the markup will be reduced (albeit much slower than it was originally applied) and the difference to the end consumer is basically zero.” No if you redcue both the wholesale price and the markup the result to the consumer is a lower price, it’s basic mathematics.

    ” Decreasing labor share of GDP, welfare payments that haven’t increased to meet rising costs (or even with inflation), GINI trends, increasing wealth gap, etc.”But again you are misusing figures, just because the “workers” aren’t increasing their wealth by as much as the top end doesn’t mean their wealth isn’t increasing, if you won $100k in tatts and your neighbour won $1m are you worse off than you were before or just worse off than your neighbour?

    And again “If you could also include how having a high exchange rate doesn’t make our exports more expensive and there fore doesn’t effect demand, which doesn’t impact the price of domestic produce it would be great.”

  183. Apollo

    I don’t know Hamis. I have young cousins who bought their homes and started family while they still had HECS debts. The banks normally work out all of your li abilities and how much your income can pay back before setting the loan amount.

    Unless they’ve changed the law and ban them from taking on mortgage, I’m not sure if that is the case.

  184. Hamis Hill

    Young people carryin HECS debt when seeking to statr a family in the security of their own home will find themselves ineligible for mortgages.
    Reality intrudes yet again.

  185. Hamis Hill

    Regarding German industry, following the father of economic’s observation that “A dwelling house, as such adds nothing to the income of its inhabitants”, post-war Marshall plan resticted finance to wealth producing manufacturing, leaving housing to survive as it could.
    Strategically, this was seen as counter to the attracions of communism inso far as people with paid employment were less afflicted by poverty.
    The same applied under Macarthur in Japan.
    At present German industry is self-funding seeking no finance from the banking sector.
    In Australia, by contrast, industry competes for funding with beighted Economist Rhodes Scholars like the execrable Abbott who carries no less tha $700,000 of debt.
    Higher interest rates anyone?
    But do not be too jealous of the Baby Boomers, in their declining years their local councils have pastened upon them like rvaning parasites extracting ever-increasing rates and charges on their everincreasing “wealth” only available to pay such bills by, you guessed it competing for finance inthe loan markets.
    As for falling prices this was predicted almost two decades ago by the drop in demand as the Boom generation sold out of the cities for reirement elsewhere.
    The consequent drop in prices is as a result of fewer people in the subsequent generations to even begin to occupy the dwellings, which ad nothing to the income of their inhabitants, especially if they are on the dole with no prospect of “Rational” employment, or stay put retirees.
    Similar conditions, surely, caused the collapse of Babylon, which allowed certain enslaved Biblical people to escape back to their Promised Land.
    Australia could be a Promised Land but certainly not under the present Howardite “false religion” of real estate speculation.
    Will the scales ever fall from their eyes?
    Why don’t the religious nut jobs ever discuss these “revelations”?
    Rationally, of course,the present group of residents can be easily dispossesed and replaced by richer foreigners and the market will never blink an eye.
    At least conservative politicians will never be out of a job playing Judas to their neighbours.
    And isn’t that all the time?
    Sadly you can’t have Statesmen without actually having a “State”.
    At present Australia does not match such a description bein rotted and divided by too much politics and fake piety.

  186. Jimmy

    ” I’m a little unclear on how people willing to take on yet more debt has any relevance to the fact a, say, BMW 3 series costs anywhere from ~25% to ~50% more in Australia than it does in the UK.” I just find it interesting that here we are in a country that according to you and many others on this thread times are getting tougher and tougher but new car sales, the quintessential discretionary spend, are at record highs and that is despite the fact they are 50% more expensive than elsewhere in the world.

    And I am still waiting on that explanation as to why a high exchange rte doesn’t equate to cheaper imports and how supermarkets are unable to avail themselves of this benefit.

    If you could also include how having a high exchange rate doesn’t make our exports more expensive and there fore doesn’t effect demand, which doesn’t impact the price of domestic produce it would be great.

  187. drsmithy

    And yet we just had record sales of new cars in Australia for 2012?

    You mean all those car dealers registering unsold cars to themselves to make their numbers look good ?

    That aside, I’m a little unclear on how people willing to take on yet more debt has any relevance to the fact a, say, BMW 3 series costs anywhere from ~25% to ~50% more in Australia than it does in the UK.

  188. Jimmy

    Dr Smithy – “Most consumer goods have huge markups in Australia (eg: many cars cost 50%+ more in Australian than they do in other countries)” And yet we just had record sales of new cars in Australia for 2012?

  189. drsmithy

    Hmm let’s think about that for 2 seconds, well for a start I was not talking about wage growth for the wealthy was I, in fact I specifically said the ridiculous wage growth for CEO’s is a major issue, but disproportionate wealth growth from the mining boom is a very different kettle of fish, which you know but are being mischievous I suspect.

    You are supporting the principle of a decreasing profit share for labor, with the consequent increasing profit share of capital.

    Your argument to support this is that a similarly increasing profit share for labor would be “unsustainable”.

    I am asking you why the rich getting richer is ok, but everyone else getting richer at the same rate is “unsustainable”.

    Nobody forced them to do it, they made their own choices.
    True. They could have just camped out in a field instead.

    REally so could you explain how a high exchange rate doesn’t make imports cheaper?
    A high exchange rate CAN make imports cheaper. Australia’s high exchange rate is (generally speaking) NOT making imports cheaper, as even a cursory comparison of prices for similar goods in other countries vs locally shows.

    Which is why I said the only way Australians can really benefit from the higher exchange rate, is to take their money overseas, or deal directly with overseas sellers. Unfortunately this latter path is frequently either impractical (eg: food) or artifically constrained (eg: car import restrictions, exclusivity arrangements with local importers).

    True but supermarkets can order their items from overseas, and even if they put a 50% mark up on it, that is going to be 50% of a lower value due to the lower price being paid.

    Thanks for making my point. When the currency drops, the markup will be reduced (albeit much slower than it was originally applied) and the difference to the end consumer is basically zero. Ie: the high dollar is not really making things cheaper for consumers, because they’re getting screwed by the middlemen.

    With no real evidence to support it.

    There’s plenty of evidence, you’re just ignoring it. Decreasing labor share of GDP, welfare payments that haven’t increased to meet rising costs (or even with inflation), GINI trends, increasing wealth gap, etc.

  190. Jimmy

    Apollo – “The HECS or HELP debt has a threshold, you have to earn decent income before you start paying back with a percentage of your income” HECS repayments kick in at $47,196 at a rate of 4% of you income, the top rate is 8% and kicks in at $87,650, so it is hardly an obstacle for the less fortunate to get a higher education.

    “JG also introduced HELP kind of loans for TAFE.” Yes she did and as I said earlier one of my clients got a $3k discount out of a $3800 course fee at TAFE for having a health care card, again providing higher education for the less fortunate.

  191. Apollo

    Serenatopia.

    The HECS or HELP debt has a threshold, you have to earn decent income before you start paying back with a percentage of your income. Some people never have to pay it back when their income is below the threshold. There’s also leakage when people go overseas and live, I think it’s getting close to 1/2 or $1 billion a year now. It will help if the government is able to capture back from those who work overseas and I think the grace period for not paying back when your income is low should be 3 years only, after that you should pay 1% of your income when it’s below the normal threshold, that’s hardly anything unless you have a disability and need special consideration.

    JG also introduced HELP kind of loans for TAFE.

    So what if they get subsidies for their accommodation and utilities? Australians get some subsidies and get more $20 more per day, it does not work out any worse. Like I said the government should not be subsidising the private rental market and providing income for landlords, or providing someone penthouse rental because they like the lifestyle, there is a limit to it.

    The current dole is a bit low and needed to be raised a bit. If you want to get more than that rate pay into an insurance to the government. There can be good reason to have higher rate for certain people, it need to be targeted and not just be an across the board rise.

  192. Jimmy

    Dr SMithy – “Huh ? Why is disproportional wage growth for the wealthy OK, but similar growth for everyone else “unsustainable” ?” Hmm let’s think about that for 2 seconds, well for a start I was not talking about wage growth for the wealthy was I, in fact I specifically said the ridiculous wage growth for CEO’s is a major issue, but disproportionate wealth growth from the mining boom is a very different kettle of fish, which you know but are being mischievous I suspect.

    “Shame about all the people who have sacrificed huge amounts of their disposable incomes in that 15 years.” Nobody forced them to do it, they made their own choices.

    “Utter rubbish.” REally so could you explain how a high exchange rate doesn’t make imports cheaper?

    “Unfortunately you can’t order the weekly groceries from America.” True but supermarkets can order their items from overseas, and even if they put a 50% mark up on it, that is going to be 50% of a lower value due to the lower price being paid.

    “The point being made is that the situation is getting worse, not better” With no real evidence to support it.

  193. Hamis Hill

    Thanks to the good doctor for restoring my sanity which I was beginning to doubt before his post.
    Getting back to anecdotes, my baby boomer wife and I were able to save a 40% deposit on a new home in two years while hiding out in a two bedroom flat and living frugaly on two incomes.
    But that was only because the land component of the purchase had been moderated in price by the state government being in the land development market and therefore keeping up the supply to reduce the price.
    A school mate had bought in Tuggeranong, where, as he pointed out, he paid much less by occupying the land on a 99year lease.
    This was ended by Howard.
    So gen Y cannot replicate these advantages.
    As teenagers we dreamed of escaping to the South Coast, building a home on cheap land and living happilly ever after, only to find that LJ Hooker and clones had bought up all the land and were trickle feeding it to maintain what we regarded as unaffordable prices which destroyed our dreams of escaping the mortgage trap.
    Pre-war, the SA government, seeing manufacturing as the means for wealth creation in the absence of mining or agricultural riches, actively developed state housing at inexhorbitant prices inorder that manufacturing concerns would be attracted by the resultant low wage demands.
    All such economic rationalism now displaced by the unassailable Howardite false religion of housing speculation.(all wrapped in sham Christian piety, of course)
    Prof Edward Shann had much to say on the subject in his “Economic History of Australia”,which is largely unread and unavailable.
    As is affordable land, with even developers complaining about the convenient “Asset Price Maintenance” policies on land availability put into place by corrupt local councils to restrict supply and elevate prices.
    Oh, and thereby making dole payments unliveable!
    But one cannot criticise religion for the belief system of the housing speculator must be tolerated as a sign of civilised behaviour.
    Any other view is just barbaric! Rationalism, who needs it?

  194. Serenatopia

    One more thing Apollo—check your German statistics! They get almost full subsidies on accommodation and utilities! Yep!

  195. Serenatopia

    @Apollo—free healthcare and education–lol—please read the Gonsky report to know how well we are doing on that scorecard! And let’s compare apples with apples now! Remember the level of tax we pay! I spent most of my 20’s paying back my exorbitant uni debts! And Gen Y’s are not privileged! Unlike baby boomers, we are unlikely to own a property, a decent car and the best we can afford is backpacking in Kathmandu lol

    @feline—nice comments!

  196. drsmithy

    The “From each according to his ability, to each according to his need” philosophy has been proven not to work. I have much more faith in Adam Smith’s invisible hand.

    Here’s a few other things Adam Smith had to say:

    “Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”

    “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”

    “It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.”

    I doubt Adam Smith would find much to approve in our contemporary “free market”.

  197. drsmithy

    Again the GDP split may have shifted but that doesn’t mean the average worker is worse off now than they were 20 years ago, their wages have grown significantly and at a faster rate than inflation but the mining boom has made the big earners wealth grow at unprecedented rates. And what would you like to see done, the average wage grow at unsustainable rates or the wealth removed from the big income earners?

    Huh ? Why is disproportional wage growth for the wealthy OK, but similar growth for everyone else “unsustainable” ?

    Yes housing prices have increased dramatically ober the past 15 years but over the past 3 or 4 they have hardly grown at all, and this looks set to continue for some time yet, that is the market is correcting itself.

    Shame about all the people who have sacrificed huge amounts of their disposable incomes in that 15 years.

    The exchange rate is making the cost of living lower for anybody earning their income in Australia by reducing the cost of imports – eg fuel.

    Utter rubbish. Most consumer goods have huge markups in Australia (eg: many cars cost 50%+ more in Australian than they do in other countries). The price of fuel has nearly zero correlation to currency movements.

    The only way Australians genuinely benefit from our stronger currency is when the travel overseas, or buy directly from overseas. Unfortunately you can’t order the weekly groceries from America.

    Come on Ian – we still have a very good healthcare system & education system that enales the less fortuante virtually free access, we have various welfare payments that support the disadvantaged, the govt is introducing the NDIS, we are hardly the worst country in the world to be down on your luck.

    I don’t think anyone is saying Australia is “the worst country in the world to be down on your luck”. The point being made is that the situation is getting worse, not better.

  198. Lyn Gain

    @drsmithy. Just loved ‘the plural of anecdote is not data’.

  199. David Hand

    I concede my experiences with Gey Y people are anecdotes. But personal experience has a lot of impact on personal attitude.

    Redistributing wealth to those who don’t have it may be fair but it is only possible when someone has gone out and created it in the first place. Though there are disproportionate rewards paid to some, it’s hard to fix this without damaging the wealth-creating model in the first place.

    The “From each according to his ability, to each according to his need” philosophy has been proven not to work. I have much more faith in Adam Smith’s invisible hand.

    Excesses such as the shamelessly outrageous salaries paid to semi-competent corporate executives who seem to make millions at the same time as they fail can be fixed. They are a comparatively recent phenomenon in the last 20 years or so, brought about by a lack of checks and balances that regulators can fix.

  200. Jimmy

    CML – Again the GDP split may have shifted but that doesn’t mean the average worker is worse off now than they were 20 years ago, their wages have grown significantly and at a faster rate than inflation but the mining boom has made the big earners wealth grow at unprecedented rates. And what would you like to see done, the average wage grow at unsustainable rates or the wealth removed from the big income earners?

    Hamis – Yes housing prices have increased dramatically ober the past 15 years but over the past 3 or 4 they have hardly grown at all, and this looks set to continue for some time yet, that is the market is correcting itself.

    Ian – “At current exchange rates I would say that anybody coming to this country from other countries will find the cost of living very high indeed” The exchange rate is making the cost of living lower for anybody earning their income in Australia by reducing the cost of imports – eg fuel.

    Gina did inherit a vast amount of her wealth but has also invested heavily in expanding her assets and just as the price has gone up it could easily plummett (as it did in September).

    “I can only say that it is a good thing for these luckless souls that Australia was once a caring society” Come on Ian – we still have a very good healthcare system & education system that enales the less fortuante virtually free access, we have various welfare payments that support the disadvantaged, the govt is introducing the NDIS, we are hardly the worst country in the world to be down on your luck.

  201. Apollo

    I’m perplexed by Serenatopia’s rage, everything is privatised, education, health?

    What country are you living in Serena?

    In Australia we provide free healthcare and education. The unemployed and pensioners also get rent assistance and concession for their bills with the healthcare card. There’s winter energy concession. And if it’s not too cold, put a jumper on, you don’t have to always use heater and Australia is not as cold as Germany. And electricity cost in Germany is about 25% more than in Australia.

    Comparative price level in Germany is 119 compared to Australia at 115. So The cost in Germany is 3.478% more expensive than Australia, and they get $15 per day compared to Australians who get $35 per day and complaining. Even if you take off $20 to meet compulsory cost, you’re still left with $15. And there’s a limit on how much rent assistance and lifestyle the government should assist a person with, government should not be subsidising private rental market and provide income for the landlords anyway. If you want to get more than this current payment rate- let’s say make it the base rate- add a user pay system like the Swiss. Everyone says Switzerland is great, well they pay for their own healthcare and unemployment insurance.

  202. FelineCyclist

    I’m not really sure what the point of this article was. A list of maximum entitlements in other countries, with no analysis of the costs of living in those countries (especially housing), the other benefits available, the unemployment rates, or acknowledgement of the fact that an Asutralian unemployed person can’t just get up and go to another country to access unemployed benefits, so it’s not really helping the those who are currently living on Newstart.

    It seems the only point of the article is to advance the “well it could be a lot worse for you” argument – which in effect says to unemployed people “shut up and be happy with what you’ve got”. The comments on this article certainly support this argument, with the same old tired arguments about expecting Newstart recipients to live like monks and exclude themselves from society until they have a job. Is that what people really expect – that you deserve to be removed from society until you have a job? The same principle underlies the prison system. Newstart – the prison for those who have committed the crime of being unemployed.

  203. Ian

    David,

    Judging by my own Gen Y kids I think you have a point when you say:- “they want everything now and their commitment to their career lasts as long as it takes them to save up for their next back-packing trip to Kathmandu.” There is for one thing less loyalty to the employer these days and vice versa and for another frugality has gone for a ball of chalk and there is for many no such thing as making do.

    Again, judging by my own kids, they feel able to do this because the have some sort of safety net to fall back on viz. me.

    These are not the people the dole is designed to protect and being mean spirited to those who do need help is to my mind not the sign of a healthy society.

    And then you make the claim that it is the free market, capitalist society that has got us to where we are. Certainly it is and that can’t be disputed as that is de facto what we are and have been. Other countries though seem to have achieved more or less the same level of well-being and prosperity as we have with much less emphasis on the so-called free market and the rest of this neoliberal stuff.

    Yes we have attained a high level of material prosperity but it has also been very unevenly distributed and based on a short-sighted exploitative approach to our natural resources with an over emphasis on “efficiency” whatever that means without due regard for the future. Norway and East Timor have at least set aside some of their resource based wealth (such as it is for East Timor) to help build a more secure future. And Norway can’t be accused of being mean to those less fortunate of its citizens. We can – not the meanest perhaps but mean.

    What is this “politics of envy” nonsense and accusing me of sexism for my comments on Gina? Gina is a women and she did inherent her wealth and there is nothing I can do about that. As for envy. If I’m envious at all it will be of people like Noam Chomsky or Roger Federer not of those three well-to-do extremists.

  204. CML

    @ drsmithy (60) – Right on! That is what I have been trying to say (unsuccessfully) all through this thread. The dividends resulting from productivity gains should be shared equally. There is no excuse for the bosses to play winner take all. Thank you.
    Also – good points by Ian at (51)

    @ Lyn Gain – I am not saying that all workers in Australia are deprived of a decent income, but there are large pockets of poorly paid people in the workforce eg: women, particularly those in traditional female occupations/professions, for example. Seems to me you can only measure incomes and cost of living in THIS country by looking at the overall split between wages/profits, and who gets what. And of course I don’t believe that coalition spin about the carbon tax etc.
    The issue I am discussing here has been evident in Oz for decades, and because of the spin merchants, the split is getting worse. We are a wealthy country, and I just happen to believe that everyone should benefit from that. Not the “chosen few” who work in the mining industry and their bosses. After all, the blo+dy minerals belong to the Australian people, NOT the mining companies or the likes of Gina Reinhart.

  205. drsmithy

    Have you employed gen Y people? My experience is that as a group, they want everything now and their commitment to their career lasts as long as it takes them to save up for their next back-packing trip to Kathmandu.

    Ah, yes, the obligatory “back in my day” argument. Just like your parents used to talk about you and your friends.

    What was your first home like? Mine was a 1000 sq. foot fibro well out into the suburbs. Last year, 4 corners broadcast a heart rending programme about a family being evicted from their first home. It was a 4 bedroom 2 bathroom macmansion with two car garage and swimming pool out the back.

    A common, but specious, argument. Tell us what proportion of the cost the land component was of that fibro shack, and how big the block was.

    The (massive) increase in housing costs are made up almost entirely of the land component. Construction costs have remained essentially static, and may even have decreased a bit. The price difference between buying a small home and buying a big home, as a proportion of the total cost of the property, is relatively small.

    Good on them but I don’t feel guilty. They don’t look like they’re doing it that tough to me.

    They will be. After all, they’re going to be funding the baby boomers’ retirements for most of their lives, either from having paid outrageous amounts for their houses, or through higher taxation.

    The boomers, of course, are busily blowing their unearned windfall on anything and everything they can.

    I had a 30 year old guy apply for a job with me 3 weeks ago. Nil qualifications. Nil work experience anywhere near my industry. His CV was 6 months a year as a snow-boarding instructor in the ski fields of Europe every year for the past 9 years. He spent his 20s working 6 months a year and partying the rest. Good on him. I didn’t hire him.

    The plural of anecdote is not data.

  206. drsmithy

    CML – there’s no reason why the split in the GDP should remain consistent over time. In fact, I’d expect labour’s share to decrease over time with efficiency gains.

    Uh, what ? Why should labour’s share not increase over time with efficiency gains ? They’re the ones facilitating the increasing efficiency !

  207. drsmithy

    And given the sustained period of low unemployment what proportion of people on newstart are on their long enough to need to save for a “nest egg”?

    Unemployment stats are utterly useless. One hour a week counts as “employed”, FFS.

    Please provide evidence of the lack of real wages growth in the past 20 years!

    That’s not what I said. I said the wages share of income has been decreasing. Or, in simpler terms, the bosses are taking home proportionally more and the workers are taking home proportionally less. It’s been a bit up and down, but the overall trend is quite clear.

    Scroll down to “income from GDP” here:
    http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5204.0Main%20Features22011-12?opendocument&tabname=Summary&prodno=5204.0&issue=2011-12&num=&view=

    This a phenomenon common across the western world, as has been the response – takeup of debt to maintain a relative increase in living standards, and for those who don’t have that option, increasing reliance on welfare payments.

    Yes but that doesn’t mean the average worker is going backwards.

    Proportionally it essentially does. The income gap (and inequality in general) in Australia has been increasing for years. It’s certainly not as bad as the US, but with going on 16 years of political leadership slavishly devoted to emulating American neoliberal economic policies, we’re well on the way to catching up.

    And again compare the unemployed’s ability to get healthcare or higher education here to the US.

    Using probably the worst offender in the western world as an example of who we’re better than ? Does the phrase “damning with faint praise” mean anything to you ?

    You say the cost of living in this country is high but can you give us some figures to back that up? The tabloids and the opposition love to discuss “the cost of living pressures” but when inflation is running at below 3% and interest rates are at an all time low where are the figures to support this claim?

    Australia has something like 4 of the 10 most expensive cities in the world to live. Our real estate bubble has “gifted” us the most expensive housing on the planet (which is steadily impoverishing an entire generation of Australians and has likely condemned most of the next to never owning their own home).

    If you think real inflation is only 3% you’re off in la-la land. Just the increase in housing costs utterly blow that number out of the water, before even getting to other essentials like utilities, food and transport (but, hey, I guess that’s ok because TVs and cameras are cheaper !).

  208. Apollo

    social security system ahhhhhhhhhhhhhh

  209. Apollo

    their security system.

    Senility is not good. Hope I’ve answered everyone. G’nite!

  210. Apollo

    Geomac, sorry I’ve been busy. I’ve just read your comment thanks.

    @Violet and @DrSmithy go to aneki.com the ranking is there. Switzerland rank 2 with comparative price level of 159 behind Denmark at 1st with price level of 166, Australia is at 15th and price level is 115. So that means Switzerland is 38.26% more expensive than Australia.

    However, go to swissinfo.ch and see there social security system. It’s user pay, you have to contribute to the unemployment insurance for at least 12 months of the past 2 years and you get 70% of your weekly average in the last six months. You can opt to contribute more and get more. Must be a resident have work permit and looking for work etc.

    Health insurance is compulsory purchase, government might subsidise purchase for those who have difficulty.

    So it looks like Australia is pretty generous and offer freebies, I think people should settle down and stop complaining, and think of how we can best help people with appropriate measures that will produce better outcome not just for those unemployed but for the health of the society and future of the children. Get with reality and acknowledge all the mixed bag the types of people are, and what policy is best to apply to them, instead of thinking it is either black or white.

  211. Hamis Hill

    Let’s be serious for one moment, Australia is a wealthy nation whose citizens have been, and are being, dispossessed of their national wealth by debt.
    Had the religion of housing speculation not been indulged and encouraged by Howard for eleven years and $1.25 Trillion had not been tied up in mortgage debt, how much of the nation’s natural resources would have been exploited by local capital rather than foreign?
    Those old-time religionists may have been right when they said greed was deadly sin for it has killed off national wealth and the critical faculties of many of the nation’s citizens.
    Post-WWII terminating building societies allowed Australians to fund the building of their own homes, time to resurrect that strategy?
    This may definitely be one of those “somebody” helps those who help themselves situations because, sure as hell, those profiting from the present circumstances could not care less about the “Losers”.
    This would be a free-market strategy, gauranteed of support from the conservative side of politics?

  212. Hamis Hill

    The father of economics’ view that as wages rose and savings rose and the interest that could be charged for loans decreased they(capitalists)”would have an interest to deceive and oppress the public, using all means at their disposal to have governments intervene in their favour.
    So why shouldn’t the wages share of GDP increase over time?
    Because interest rates will fall?

  213. David Hand

    Serenatopia has put it beautifully. Just remember that all those Gen Y people going off to Canada, the US and Europe are not refugees. They are cashed up young Australians off to spend their newly valuable Australian dollars while they bum their way round exotic locations doing casual work. They are completely unconscious of the fact that as they get older, they might want to start a family and will be old one day. Good on them but I don’t feel guilty. They don’t look like they’re doing it that tough to me.

    I had a 30 year old guy apply for a job with me 3 weeks ago. Nil qualifications. Nil work experience anywhere near my industry. His CV was 6 months a year as a snow-boarding instructor in the ski fields of Europe every year for the past 9 years. He spent his 20s working 6 months a year and partying the rest. Good on him. I didn’t hire him.

  214. David Hand

    Ian,
    Thanks for your beautiful socialist essay. Some of it does not stand up to scrutiny.

    Have you employed gen Y people? My experience is that as a group, they want everything now and their commitment to their career lasts as long as it takes them to save up for their next back-packing trip to Kathmandu.

    What was your first home like? Mine was a 1000 sq. foot fibro well out into the suburbs. Last year, 4 corners broadcast a heart rending programme about a family being evicted from their first home. It was a 4 bedroom 2 bathroom macmansion with two car garage and swimming pool out the back.

    Forrest, Palmer and Reinhart have their billions tied up in massive industrial complexes that employ tens of thousands of people directly and even more indirectly. Though we might quibble about how much they should get and what’s fair, the market economy we live in provided the environment to their endeavours and success and we are all far better off because of it.

    The politics of envy cheer-led by Wayne Swan is shallow and childish though like Jimmy, I differentiate such entrepreneurs from the paid servants of corporations who have worked out how to rort commercial law and claim outrageous salaries for shit-house performance. Your comment about Gina merely inheriting her wealth is shallow and sexist.

  215. Serenatopia

    Get your facts right!

    So in the UK the housing benefits are more generous and in Germany they pay for your accommodation and heating…but Australians are better off because they get a few extra pennies…hmmmm food, accommodation, heating is damn costly in this nation!

    I hate statistics…and surveys for that matter…and ridiculous comparisons…how does the argument go again…ahhhh yes! ‘it sucks being on the dole in Australia but really it would suck more if you were in the Congo! So stop complaining and accept that you are lucky…alright!’

    As an OECD nation, we get very minimal benefits for our input—hell everything is privatised! Education, health etc etc…Check out what Gonsky has to say!

    How about you start doing some qualitative research and get your story right! Australia ain’t a nice place for the downtrodden or for rising stars for that matter (most of my Gen Y friends are on the way out to Canada, US and Europe)…did you not hear about the recent cuts to single parents’ payments? Let’s do a survey on them…

  216. Ian

    Jimmy,

    At current exchange rates I would say that anybody coming to this country from other countries will find the cost of living very high indeed. For most miners the cost of living is not a problem but for most others, certainly for the young asset poor residents about to enter the workforce for the first time, the cost of living is a chain around their neck. How are they to afford to own a home or rent one. We, the baby boomers have skimmed off much of the wealth of this country leaving our progeny to battle it out as best they can.

    We have also had pretty extreme inflation in this country which I’m pretty sure is not reflected in the CPI. Housing prices exploded (they have now largely settled down at a generally unaffordable level) and housing is amongst the most significant outlays for newish entrants into the workforce.

    As to those mining magnates and their billions we need to ask ourselves about their entitlements to exploit Australia’s non renewable and unaccounted for resources. I don’t begrudge them a reasonable fortune for their enterprise and so on but we are in effect subsidizing that fortune by virtually giving away our resources and by bearing the cost of dealing with their waste. Gina inherited much of her wealth and has been incredibly lucky to find herself with the entitlement to assets that have increased substantially in value through no fault of her own.

    The unlucky ones who for numerous reasons have dipped out on making their way in this dog eats dog society are increasingly being targeted by our neoliberal governments while the rich are being favoured.

    I can only say that it is a good thing for these luckless souls that Australia was once a caring society and it is taking some time for our governments to dismantle the safety nets that were put in place when we still cared.

  217. Lyn Gain

    @CML My heart doesn’t bleed for Twiggy either – and as for risking assets, don’t make me laugh. However, I suspect Jimmy may be on to something about the current cost of living. I’m sure I read somewhere last year that we’ve never had it so good in terms of income levels and costs but I’m too lazy to try to research it. My feeling is that all the media and Opposition hype about working people never having to do it so hard is just that – aimed at creating the perception in people’s minds that the Government is making them poor, e.g., the carbon tax rubbish.

  218. Phen

    CML – there’s no reason why the split in the GDP should remain consistent over time. In fact, I’d expect labour’s share to decrease over time with efficiency gains.

    I’m sure this’ll all blow over in a month or so given I cant see the government having the guts to increase Newstart to the benefit of such an easily demonised group as jobseekers, especially when there’s such sensitivity on the government expenditure side.

  219. Hamis Hill

    Jimmy, you will have to concede that “Assett Price Inflation”,or the rise in the price wage earners need to put a roof over their head, and which is not included in the Consumer Price Index on which you base your inflation figures, distorts the accuracy of your arguments.
    You know, those empty boats returning to Indonesia might be more productive if they could be filled with those who wallow in their ignorance of matters economic like pigs in scheiss.
    Call it the East Timor solution.
    In anticipation of your reply.

  220. CML

    Jimmy – I don’t care what the odd “wage rises” have been over the past 20 years, or what sections of the economy have benefited from such rises. The fact remains that the GDP split, as measured by the ABS, is now at least 10% lower in real terms than it was 40 years ago. Someone is getting that “extra” money, and it ain’t the workers.
    And my heart bleeds for the likes of Twiggy Forrest et al, NOT!
    Cost of living – for example, just about every economist in this country worth their salt has been saying for years now, that a sizeable number of the WORKING citizenry will never own their own homes. This has always been seen as mandatory if you want to exist adequately when you retire. We have been fortunate in that regard, but some of our friends who don’t own their homes are really struggling. And rents are a killer for those on fixed or low incomes, at any time during their life. There are many other factors which impact on people in these categories. Wages are just too low for them to be secure, and there are just too many people who have more than they need. We could do with a bit of balance here.

  221. Hamis Hill

    Switzerland is reputed to have ordained full employment.
    Could those posters with direct experience confirm this?
    If so what sort of jobs exist in Switzerland that do not exist where unemployment levels are high.
    We might be able to use some of those jobs in Australia.
    But there is a trade off in high unemployment as it is supposed to create a pool of unemployed who compete with each other to gain employment by accepting lower wages.
    In Bengal under the “John” Company such competition to load and unload the company ships had workers accepting as their reward just enough money to avoid starvation overnight.
    The resulting lack of money in the country led to interest rates of 48% which is how these merchant adventurers managed to beggar one of the, then, richest nations in Asia.
    In Australia,it is being done with a $trillion mortgage debt, with its benighted denizens strangely unable to read and learn what the father of economics wrote on wage levels and interest rates, just before the founding of Australia.
    The relatively higher interest in OZ is linked to the lower wages starting with Hawke’s Accord, consensus wage freeze which averted a flight of capital which would normally happen with a “Communist” government takeover.
    The latter being the conservative reaction to any Labor government.
    Could we instead import some of that notorious “Protestant Work Ethic” from Swizerland and give everyone gainful employment?

  222. Jimmy

    CML – “As far as the mine owners “risking their capital” argument – can you name any of them who are on the breadline?” No you can’t name them because nobody ever hears of the bloke who went broke, but look at Nathan Tinkler now going through some pretty big financial issues, or Twiggy Forrest after the Anaconda Nickel debacle.

    “So, the 6-7% of employees who work in the mining industry are better off? What about the other 93-4%? If you have a look at the ABS GDP split between workers and bosses, you will see that what I say is correct.” My point is you are looking at the wrong figure, there has been real wages growth in this country for a prolonged period, the minimum wages has been increasing at least in line with inflation and inflation has been contained for well over a decade.

    You say the cost of living in this country is high but can you give us some figures to back that up? The tabloids and the opposition love to discuss “the cost of living pressures” but when inflation is running at below 3% and interest rates are at an all time low where are the figures to support this claim?

  223. CML

    So, the 6-7% of employees who work in the mining industry are better off? What about the other 93-4%? If you have a look at the ABS GDP split between workers and bosses, you will see that what I say is correct.
    And what about the huge gap in wages evident between men and women in the workforce? As far as I’m concerned, if you take into account the high cost of living in this country, wages for all should be a lot higher than they are, and those at the top could do with a whole lot less. As far as the mine owners “risking their capital” argument – can you name any of them who are on the breadline? All indications are that most of them are billionaires. No hard luck stories in that lot! If they were made to pay their fair share of tax, we wouldn’t have a problem with increasing the Newstart allowance, funding the NDIS and Gonski.
    For reasons I explained in an earlier post, that ain’t going to happen, no matter what the complexion of the government is. This whole situation reminds me of a book I read at Uni some 40 years ago called “Future Shock” – (I think the author was Alvin Toffler?). Well the “future” has arrived, just as he predicted! And it can only get worse, if the current pathway continues and the coalition is returned to government. Most people don’t understand that. They just keep listening to the spin merchants and vote against their own best interests. Give me a break!!

  224. Jimmy

    Ian – “by what right do mining magnates, CEO’s and others claim an ever increasing share of our total wealth?” Well I think you have to differentiate the categories there, mining magnates do get to claim there share because they risk their assets to gain their fortune and I can’t see how you can discourage that as they create wealth for more than just themselves.
    CEO’s are a different kettle of fish, how they can earn million dollar salaries and get more in golden handshakes even if they drive the company into the ground is beyond me.

    “By trying to “incentivise” them by providing only minimal support we are among other things helping to increase inequality and play into the hands of the powerful.” But that isn’t all we are doing, public education is free (or pretty much free), you can go to Uni and only pay for it after you are earning a good income, I had a client in the other day who was going to pay less than 25% of a TAFE course (a $3k discount) because they were on a Health Care Card, my wife used to work for a “job Network” Centre where they would actually buy clothes for their clients (actually take the client shopping) to wear to a interview and at the very least subsidise extra training for them.

    SO it isn’t just the stick.

    And again compare the unemployed’s ability to get healthcare or higher education here to the US.

  225. Ian

    Jimmy,

    I think you are right in your analysis of the difference between how Australia’s inequality has widened as compared to the US (a basket case). That of course lessens the “burden” of inequality in this country but really we should be aiming to reverse this trend altogether through whatever means available if we are to remain a cohesive society into the future. We have to ask ourselves “by what right do mining magnates, CEO’s and others claim an ever increasing share of our total wealth?” Along with the increased share of the total slice comes an increased hold on power which in turn allows the elite to wrest ever greater shares of the total pie from the rest of us.

    Right at the bottom of the rung are the unemployed often, as noted by others, people ill equipped to find a job. By trying to “incentivise” them by providing only minimal support we are among other things helping to increase inequality and play into the hands of the powerful.

    I for one am quite willing to pay more taxes so as to help provide these people with something more than a mere existence. As for the bludgers; well some of them I admire like those feral tree huggers willing to live precariously on the smell of an oil rag in order to fight for what the believe in.

    I address this response to you not because I think you begrudge higher payments to dole seekers but because you raised the question of rising inequality here versus in the US.

  226. christoll

    There are major problems with the journalistic standard of this article. Apart from the failure to consider the impact of Australia’s extremely high cost of living, which has been noted by other commenters here, it’s clear that the author’s research was far from adequate. I’m not sure about the other countries listed, but I know that unemployment benefits for most unemployed people in Germany are much higher than what the author has described. This is because benefits there are based on the person’s previous wages and employment, similar to what the author says applies in the USA. Most people in Germany will receive a benefit equal to about half their previous salary (!) for a period of up to two years, depending on how long they were previously employed. The benefit the author describes for Germany is only applied once this initial benefit runs out, if the person is still unemployed at that time – and of course most people won’t be.

    Given the gross inaccuracy of the author’s information about Germany, I am not inclined to believe any of the rest of the information presented here either. As far as I’m concerned, this article is essentially useless.

  227. Jimmy

    CML – “The rich just keep on getting richer!” Yes but that doesn’t mean the average worker is going backwards.

    Given the rapid growth in mining magnates wealth over the past decade or so it is very possible that the average worker has seen wages growth of say 7% (well above inflation) but becuase the top end have seen their fortunes growth by 50% then the GDP percentage will fall.

    That is very different from Dr Smithy’s depression of wages claim and very different from what has happened in the US over the past 40 years where real wage growth has flat lined (at least partially due to Reagan smashing the Unions) while the top 5% have grown massively.

  228. CML

    Easy Jimmy – just take a look at the share of GDP that goes to workers today, as opposed to what it was 20 or more years ago. In the 1950-60’s, that share was 50%+, now it is in the low 40’s%.
    The rich just keep on getting richer! And as I pointed out above, the rich (big business) run this country, not the government of any persuasion. So don’t expect anything will change in the near future. At least not until we have a more discerning electorate. Up the revolution!!

  229. Jimmy

    Dr Smithy – Yes most people want to work (and given the sustatined period of low unemployment most do) but my argument is against those who say the dole is only “existing” and I can’t eat out, or pay $400 a week for my inner city apartment while I am on the dole which has been a feature of the commentary on this issue in both major papers – Guess what I work full time and I can’t afford to eat out or pay $400 a week in rent.

    And given the sustained period of low unemployment what proportion of people on newstart are on their long enough to need to save for a “nest egg”?

    “. The real problems here are the diminished profit share of labor (ie: depression of wages)” Please provide evidence of the lack of real wages growth in the past 20 years!

  230. Ian

    Saugoof,

    This attack on dole seekers in Australia is in my view mean spirited and reflects much of what the country has become. We crack down more and more on the “scum” dole seekers at the same time as we do nothing about the rapidly increasing inequality within our society. We are also spending more on the military and on punishing asylum seekers. Clearly our priorities are not on the people in need but on the people in power.

  231. CML

    @ Lyn Gain – I actually agree with your sentiments, but let’s face it, we would belong to about 5% of the population who would be willing to pay more tax.
    As for your other revenue raising suggestions – ANY government (only Labor would try) who introduced these measures would be run out of town and possibly, tarred and feathered! Then when the “Tories” are returned to their “rightful” place – running the country – they would very quickly set about reversing all such measures. In other words, big business runs this country, so no government is going to commit political suicide by upsetting them. If you don’t believe me, watch the excellent series on the mining industry “Dirty Business: How Mining made Australia”, currently screening on SBS1.
    These bast+ards have been getting rid of Labor governments and Prime Ministers in this country since federation. Do you remember a bloke called Kevin Rudd? The MSM likes to spin the yarn that Rudd was hopeless, useless etc., that the factions removed him, that Julia stabbed him in the back, that all his cabinet colleagues wouldn’t work with him,(and many of them helped the mining bosses out by saying just that) and on and on it goes. But why did all this happen? Because the mining industry chiefs wouldn’t wear his version of the mining tax. That’s why.
    And still the bogans vote for the coalition, who couldn’t give a damn about people on welfare, the working poor and the homeless. They will all be much worse off if the predicted coalition victory comes to pass later this year. Go figure!

  232. drsmithy

    It’s supposed to be to encourage you to get a job, if you could live on newstart while still eating out and hitting the clubs on a Saturday night then many people (not saying you) would say why work!
    I don’t think anyone is arguing someone on Newstart should be able to live a high life, but not having to count every penny, and being able to save some sort of nest egg for emergencies by living frugally is not an unreasonable goal to strive for – it certainly used to be possible in the past.

    The idea that some meaningful proportion of people will choose bare survival on a livable dole, over substantial quality of life improvements with a job, is both offensive and completely unsupported by evidence. The vast, vast majority of people want to live at least comfortably, and are happy to work a fair 40 hours a week to attain it. The real problems here are the diminished profit share of labor (ie: depression of wages) after a couple of decades of neoliberal economic policies and a massive real estate bubble sucking up disposable income such that even people in the top income quintile often “feel poor”.

  233. drsmithy

    I should add that this has changed markedly in a relatively short period of time. When I relocated from Sydney to Zurich in 2007, I took a 20% pay rise to cover cost of living differences. When I came back from Phoenix to Brisbane 4-odd years later, I reckon Brisbane is damn near as expensive to live in as Zurich was (with a few marked examples of eye-wateringly expensive items in Switzerland, like beef).

  234. drsmithy

    Australia is rank 15th most expensive country to live in the world still behind Germany at 14th and way behind many of the OECD countries.

    I find that difficult to believe. I travel reasonably widely and I’m struggling to think of many places I’ve been to where living costs are higher than Australia (Switzerland is the only one that springs immediately to mind). The costs of living in this country are out of control, and the ridiculous premiums attached to most consumer goods (eg: cars, clothes, furniture) are just laughable.

  235. Steve777

    We are a society that leaves people behind. The old post war consensus that kept unemployment under 2% until 1974 has long since broken down and won’t come back again. So 5% to 10% of individuals and families, mainly those with learning or mental health issues, are pushed out the bottom of the economic heap. The sort of low skilled jobs they may have once performed have long since been exported, automated or are no longer done. So what’s the answer? Free market fundamentalists would abolish the dole and employ them at $100 – 200 per week to do jobs no one else wants to do. Presumably they would live in shanty towns / favelas on the edges of our towns and cities. And expand the jail system as they have done in the USA. Of course that is no answer. We need to somehow find a place in our society for those who are now excluded. I don’t know how.

  236. Lyn Gain

    @CML Go down well with whom? Those who think they have no obligation to contribute to the wellbeing of those less well off? I have no objections to paying increased taxes. And what about other forms of revenue raising apart from personal income tax, e.g., recreating the original mining tax instead of the current farce, re-introducing wealth taxes and other progressive taxes, unlike the regressive GST. Some of us who support Newstart increases are acutely aware that ‘someone has to pay for all these things’. There is a large array of options, none of which involve cutting worthwhile social programs.

  237. David Hand

    One of the unforseen outcomes of the establishment of a welfare state was the development of a permanently unemployed uneducated, unskilled and unemployable underclass. It is far worse in the UK than it is here in Australia. Good policy will keep the dole at a level where most people are incentivised to get off it as soon as they can.

    Part of the problem is the changing demographics of job opportunities. As jobs for unskilled workers are taken over by technology, those without an education are unable to adjust and fall out the bottom. This is no reason to stop progress but rather a challenge to lift the education and skills of the workforce.

    It must happen because without change, the capacity of a country like Australia to support beneficiaries will reduce.

  238. CML

    @ Lynn Gain. The point is that someone has to pay for all these things. A $50/week increase in the Newstart payment may be seen as “necessary” by the various welfare groups, but they never tell us where the money is coming from. Currently, an increase of that magnitude will cost around $7.5 billion dollars, so what do you want the government to cut? The NDIS or maybe Gonski? They will each cost around that amount. There are no free lunches!
    Of course, the government could always increase taxes, that should go down well.

  239. Patriot

    If you want to know who’s offering the best overall package you need only look where illegal boat bludgers pay the biggest bucks to enter. We’re right up there at the top of the list of countries asking to be fleeced by those who don’t feel like earning their way in the world.

  240. Lyn Gain

    What exactly is the point of this article. So we’re better off than the United States in terms of the dole. We all know we’re also better of in terms of Medicare. Is this another dive to the bottom – the lowest common denominator?

  241. Steve777

    These sorts of comparisons are not that meaningful without factoring in the cost of living in the different jurisdictions, especially housing costs. Still, it is obvious that anyone who is unemployed in one of the larger capital cities would be really stretched finding somewhere to live or hanging onto a home they were renting or paying off while employed.

  242. Violet

    I, too, feel a more in depth analysis is warranted. The cost of living and the degree of housing support, for example, must be examined if there is to be any hope of providing a meaningful comparison.

    Apollo’s cited figure of Australia being less expensive to live in than our OECD peers is debatable — compare, for example, the cost of living calculations at http://www.xpatulator.com/cost-of-living-article/Cost-of-Living-July-2012_350.cfm where Sydney ranks sixth in the world, and all the major Australian capital cities lie in the top 40. (I would contend that the only reason that Tokyo ranks higher is that the weighting for accommodation is significant, and per-square metre, Tokyo is very expensive indeed; realistically, though, people simply live much more compactly, and a typical rent is, if anything, much cheaper than locally.)

  243. Ryan Ratcliffe

    i guess we just treat the 95% of people who genuinely want to live a better life like crap to make us feel better about having to pay the 5% who might not want to improve. and i bet that the 5% of people who don’t want to improve think that way because they have never known anything else. so do we help people or do we punish people?.
    To argue that a 50 dollar a week increase in the newstart allowance is going to act as a disincentive for people to get a job is ridiculous in my opinion. Every middle class person in the country crys foul when people talk about removing tax breaks or the baby bonus or puting a means test on things. They say but i have a morgaege and a new car and a boat and i want to live in a good suburbe. so the governemt subsides there life styles while they sit around their pools complaining about doll bludgers and hippys that are ruing their country.

  244. Pedantic, Balwyn

    I work with a well known charity that visits the disadvantaged to provide assistance. Each month I meet people who are struggling on welfare payments. No doubt the numbers will increase as the impact of the changes to Newstart take effect.
    No doubt also that there are some needy who are bludgers, but our role is not to judge them, but to guide them to becoming contributing members of our society.

    However, the overwhelming majority of those we visit are not dole bludgers, but people who are ill equipped to find a job; through long term sickness, mental incapacity, former or even current substance abuse, lack of education; the list is sadly very long but factual.

    More importantly these are not people that employers want to employ, even when the stats. suggest that employment is at nearly an all time high and labour is in demand.
    These are the unwanted! Do we simply ignore them or do we as tax payers put our hand in our pockets to help those less fortunate than ourselves?

  245. paddy

    I figured, on reading this article, that reading the comments would depress me. Well at least *some* of them didn’t. So I guess that’s a win.
    However, a bigger win is reading Matt Cowgill’s latest take on the subject of welfare payments. Well worth a look. http://is.gd/wPvubj

  246. geomac62

    Apollo
    No reference to anyone individually Apollo and certainly not intended to be . I was referring to Abbott or was it Howard and the job snob jibe which some are happy to take up . Seemed that that sort of conversation went on for a few years with the libs . You know the sort that class everyone in the same boat but think themselves unique individuals .
    An example . My older sister remarked that Sudanese and their 10 children famil i es were a norm and hence a strain on govt. finances . Her husband came from a family of 10 . My wife came from a family of 12 kids . When I was young at least once a year the Sun would have a Dutch family arriving with parents and at least 10 kids . None were from Sudan but were Irish , Maltese and Dutch . So obviously that must mean all Maltese , Dutch and Irish parents have at least ten kids .

  247. Phen

    So does this mean that First Dog was lying when he said Newstart was the second lowest in the Western World? Can’t we even trust the cartoons on our annual Crikey calendars anymore?

  248. geomac62

    Apollo
    No reference to anyone individually Apollo and certainly not intended to be . I was referring to Abbott or was it Howard and the job snob jibe which some are happy to take up . Seemed that that sort of conversation went on for a few years with the libs . You know the sort that class everyone in the same boat but think themselves unique individuals .
    An example . My older sister remarked that Sudanese and their 10 children families were a norm and hence a strain on govt. finances . Her husband came from a family of 10 . My wife came from a family of 12 kids . When I was young at least once a year the Sun would have a Dutch family arriving with parents and at least 10 kids . None were from Sudan but were Irish , Maltese and Dutch . So obviously that must mean all Maltese , Dutch and Irish parents have at least ten kids .

  249. Apollo

    Thanks Mike, I’ve gotta clean the house for my guest from Canada. Have a good one all of you.

  250. Mike Flanagan

    Apollo;
    They might have a dual impact if they increase their corporate tax take. It might lower the Aussie Dollar ($A).

  251. Apollo

    Geomac, I take that you are referring to me.

    I don’t need government health subsidy. I get a cold once every four year which I don’t even go to the doctor, I treat it using traditional method. I advocate health care spending for other people.

    People should be able to get the job they enjoy and want as a career but should not keep on being a snob and feel entitled, somehow they are better than those doing the ‘menial’ jobs, it’s degrading for them to do those jobs but it’s ok for them to keep living on other people’s money and don’t try to find a better way. And you ignore the generational cycle of poverty when you don’t have a targeted approach to break the cycle of poverty, I don’t make a broad stroke that all welfare recipients are dole bludgers and don’t deserve help, there are people who fall in unfortunate circumstances and need help but you need targeted help and should not reward and encourage more cycle of those who abuse the system.

    Raising the dole as stimulus? How about building affordable housings as stimulus? And curb negative gearing, if the housing market is still too fragile, it may be good to wait till next year and implement one that will not hurt the market.

  252. Christopher Nagle

    The problem with any social welfare system that enables people to live in relative financial discomfort for long periods of time is that they can get used to it. And this creates the possibility of an intergenerational welfare underclass who live dysfunctional but bearable lives, passing on all its unproductive and parasitic habits to its children. Not a good outcome.

  253. Jimmy

    Saugoof – I too have been on the dole and you misrepresented what I said, I said “many people” so yes there are those who want to work, those who feel guilt or shame or maybe just embarrassment at having to answer the “what do you do for a job” but there are also those who would be happy not to work at all if they didn’t have to give up meals out or night clubbing.
    And we aren’t being as mean as possible.

  254. geomac62

    Saugoof
    Perceptions and ignorance damage discussions on the dole . Some people who disparage dole recipients would scream blue murder if various governments reintroduced death duties or inheritance tax . All other OECD countries have it as far as I,m aware . We are the only country in the OECD bracket to fund private education so generously , most don,t at all . So a few call out job snobs/bludgers while thinking they are entitled to government largesse such as above including the health subsidy .

  255. Saugoof

    Jimmy #8
    That whole “It’s supposed to be hard to live on the dole to encourage you to get a job” argument really irks me. Trust me, the general scorn you get from everyone and the dread of having to answer small talk questions like “what do you do for a living” is more than enough incentive! I’ve lived in Switzerland, a country that has extraordinarily generous unemployment benefits, and yet also has one of the lowest rates of unemployment in the world.

    Why do we always feel like we have to be as mean as possible to whole groups of people to appeal to the exceedingly small number that abuse the system?

  256. Apollo

    Saugoof, unfortunately Australians are not cultured people. The country is full of bogans, yobbos, ockers, westies, deros etc….

    But I support raising tax on the miners, and possibly should bring back 49% marginal tax rate and apply for above $700K bracket, to fund better education, healthcare etc.

  257. Saugoof

    I’m one of the “lucky” people who got to experience being on the dole in two countries, Switzerland and Australia. And before anyone jumps to conclusions about me just being a dole bludger, these were just unlucky circumstances (employer’s company going under in a recession, etc.).

    Anyway, this gives me a unique chance to compare the systems. Switzerland has always taken the approach that being out of work means you’ve been unlucky rather than being lazy scum, so unemployment benefits are extraordinarily generous. For the first six (I think) months that you’re on unemployment benefits, you receive 80% of your last salary. After that runs out you get shifted to social security where you do get far, far less though.

    This meant that for the three months I was on the dole in Switzerland, life went on without too much of a disruption. I didn’t just have to sit on the couch for fear of spending any money if I went outside or did anything at all. With not being constantly preoccupied with money worries, this actually made searching for another job relatively easy.

    By contrast, when I was on the dole in Australia I started out full of enthusiasm of landing a new job. When that didn’t materialise in the first couple of weeks my savings started running out I had to economise and I ended up leaving the house as little as possible. After two or three months I even had to scale back on job applications. This was in the pre-internet days where you had to send in a physical CV, and getting those printed or photocopied was just too expensive. So I’d only apply to the few jobs where I felt that I’d have a very good chance. Similarly any jobs that looked out of the way were off limits because getting a train ticket there meant my food budget for the day was gone.

    Eventually, after several months with no prospects I had to ask my parents for help. That allowed me to get off the dole and onto the even lower paying Ausstudy, and then get back to uni. Still, there is a happy ending and doing well at uni meant that eventually I ended up in a very high-paying job. But those needlessly tough months on the dole in Australia I do not wish upon anyone else!

    There is one other thing that rarely gets mentioned in the whole Newstart debate. The money that you receive ends up being pumped straight into the local economy. It’s not like you’re hoarding this under a mattress. It’s not a particularly efficient way, but it is an injection of funds into the economy. The effect that this has is that in a country like Switzerland where the dole payment is very high, people still keep spending money during an economic downturn. So the effects of it are far less severe than in Australia where any downturn can quickly spiral into a recession because people stop spending money.

  258. Apollo

    Western society tend to have more depression and mental illness. Some of it might be due to a culture of vanity celebrity obsessed and body image driven or some high expectation of a person to be perfect or successful, in addition bully.ing at school or work place often occur. The society structure also has become fragmented and less communal, causing more disconnectedness and isolation.

    We need a de-fragmentation program for long term unemployed people. Make it compulsory for Social Work students to run practical, four sessions per year with unemployed people. It could be holding weekend BBQ, camping, affordable gourmet cooking class, brewer class for those who like to drink (responsible people hopefully), writing, painting, football, yoga etc. The unemployed only need to make an effort by putting $3 for the occasion and the government will fund the rest. Make sure proper receipts are provided and no fraud. The students can get some money for petrol.
    One problem I find annoying is that people complain about people without degree holding high managerial positions whereas they who have attained degrees and masters are stuck unemployed. Life is about experience, people can leave school early and work hard, become managers and business owners. Stop the insane snobbery that you have a degree and somehow you’re better and should not do ‘menial’ jobs. Australia is quite egalitarian. If you have the attitude and do whatever it takes to support yourselves, willing to take less skilled, less paid jobs to look after yourselves and build up experience rather than rely on the dole then in the future the employers will much more likely to employ you than people who think they are entitled and have been long term unemployed.

    Targeted approach and identify the individual’s need is more sensible. It may cost more in the short term, but it will save money in the long run and build a better society. There are too many ockers in Australia already, we should not increase their number.

  259. Jimmy

    Ryan – ” Its very hard to live on the newstart allowance!” It’s supposed to be to encourage you to get a job, if you could live on newstart while still eating out and hitting the clubs on a Saturday night then many people (not saying you) would say why work!

    Apollo – “Raising rent assitance depending on the cost of the location might have some merit but it’s open for more rorts and become costly,” Yeah it’s like the woman the Age had on the front page a few weeks back saying she was struggling on the doles while paying something like $400 a week rent in North Fitzroy because she liked the lifestyle.

  260. Apollo

    Thanks Jimmy, yeah the healthcare card people always forget to mention.

    Raising the dole by $50 across the board is a bad idea, the people who say the number of long term welfare recipients is small don’t get that poverty is also generational, many grow up repeating the same cycle as their parents and live on the dole. This is an easy breeding ground for more ignorant Westies (I’m not saying that all westies and unemployed people are ignorant), my Irish friend does not like Australian at all after a few accounters with the ockers, she went back to Ireland long before her visa expired. I do agree with Ashar though that unemployment target should be 4%

    Raising rent assitance depending on the cost of the location might have some merit but it’s open for more rorts and become costly, there are plenty of rorts in the current sytem already, unless the government pay directly into the landlords’ accounts and it will also show up it their tax papers.

    The skill training programs that Centrelink provides should be available for inexperienced people who have just finished school or uni within 3 months intead of waiting for so long to be eligible.

    Some people had mental trauma and can’t even be a kitchen hand. Case managers need to know people’s aptitude and don’t waste time sending them to employers unnecessarily, they can plant trees, mow lawns or do piece work like disable people. I have a nephew who got addicted to computer games and dropped out of uni. He lived on the dole for a few years being lazy. When Centrelink pushed him and he was genuine at looking for work because he was not interested in going back to uni, he appl.i.ed for positions beyond his reach. He is naive as an 8 year old and does not have strong social skill but he apply for jobs like car salesman. Eventually, it was one of our little grand niece who pushed him to go back to uni by giving him a lecture and an ultimatum.

    Gotta feed my pets, back in a bit..

  261. Ryan Ratcliffe

    i actually live on the dole. obviously you can live on the dole but it is about what affect living on it has on your ability to get a job. I pay my bills my 220 pw rent and it leaves me with about 60 dollars a week for food. I havnt bought clothes for over 2 years i cant afford to go out or eat out. Like many people on newstart allowance i have a medical condition that makes it hard for to keep employed but i don’t qualify for the disabily payments.
    Its very easy to say look you have it slightly better then other people. Its very hard to live on the newstart allowance!

  262. Ashar

    Can I put forward another interpretation, of this comparison with overseas unemployment benefits. That it sucks to be on employment benefit here in Australia, but it sucks more to be on unemployment benefits (if you can manage it) overseas.

    One thing we seem to talk little about in unemployment figures, is how nation-states run their economies with the expectations of there being unemployed and desiring an unemployment figure not of 0% (full employment) but instead somewhere around 4%.

    How do when then approach our commitment to those who “must” be unemployed by that economic desire? I find the limiting of unemployment benefits problematic because what happens when an otherwise unemployable person looses financial aid? They have to get necessities from somewhere? Do they turn to crime?

    Our unemployment benefits are not always forever either, just see our homeless people’s stories for the complexities of the situation. The amount of people who are long term unemployed is fairly tiny, even with a very lengthy period of available benefits (ie a negligible drain), so it makes me wonder what people are actually getting at when they demand we get tougher on welfare?

  263. Jimmy

    Other things not taken into account in our “Dole payments” are health care cards – which give access to medical treatment but discounts on Energy, Vehicle Rego etc and FTB payments.

    While it is difficult to live on the dole it can be done (plenty of people do it) and it is only intended to be a safety net so of course your lifestyle wil change after losing your job which is why those who say you can only exist on the dole not live are right but they miss the point.

    Interesting points Apollo.

  264. Apollo

    If someone could come up with a blend of policies, taking the best part of our current system and the best part of the user pay dole system to formulate a new one, it will be good. I don’t think a fully user paid system is good. A student who has just finished school or uni would not have paid any employment insurance. We also need to accept some inefficiency in the welfare system as sometimes people get lost for a while and take sometimes to get up and take care of themselves, just like we accept the inefficiency of our democratic system.

  265. Apollo

    Thanks for an interesting article Sally.
    Here are some interesting survey results:

    Australia is the 2nd best place to be born in 2013 just behind Switzerland in 1st and above Norway in 3rd.

    Australia is rank 15th most expensive country to live in the world still behind Germany at 14th and way behind many of the OECD countries.

    Australians are the richest people, wealth per capita is double that of the Norwegians who is at 2nd place.

    Australians are the happiest in the world, most content with their lives. Although one of last year’s survey also found Australians felt more insecure about their financial situations than the Spaniards. Schizo I’d say.

  266. TristanC

    This is a good starting point,, but these raw figures need further analysis. Without factoring in purchasing power parity and drilling down into actual comparative housing and utilities assistance rates (not simply listing maximum entitlements), we are left none the wiser as to where our dole sits.

    More detailed analysis please Crikey.

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