Thread by @docbaty

Next up in the @satpaper we’ll take a look at @secco’s "Fact check: Frydenberg’s record employment figures”

thesaturdaypaper.com.au/share/13666/2S… [Unlocked]

"Josh Frydenberg’s budget speech last week tried to paint a picture of adversity overcome. Despite drought, fire and floods, despite war in Europe and the ravages of Covid-19, he said, the Australian economy had proved resilient.”

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[The economy is not working for everyone, and has not done so for some time. It is currently a vehicle for extracted wealth from the lower- and middle-classes and concentrating it in the hands of the wealthy. That’s by 40 years of design.]

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"“Tonight, I can confirm to the house, unemployment is at 4 per cent, the equal lowest in 48 years,” he said. “There are nearly two million more Australians in work today than when we came to government. More women in work than ever before.””

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"All of this was true and, according to the experts, a huge achievement, even if it was the result of several hundred billion dollars in government expenditure and the closure of Australia’s borders to job-seeking migrants.”

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"The unmentioned, inconvenient truth is that, according to Treasury, in this financial year inflation will be 4.25 per cent, while wages will have grown by 2.75 per cent. In net terms, workers are 1.5 per cent poorer.”

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[The ACTU released figures indicating workers had effectively received an $800-odd pay cut as a result, for those earning the median wage.]

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"And while Treasury’s forecast for next year has wages growth at 3.25 per cent, barely above inflation of 3 per cent, it’s worth noting that its wages forecasts have been consistently over-optimistic…”

[Every. Damn. Year.]

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"Not surprisingly, then, Frydenberg’s speech scarcely mentioned government debt or the budget deficit. He uttered the word “deficit” just once, blandly noting the budget would be in the red by $78 billion, or 3.4 per cent of gross domestic product, in 2022-23.”

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[And continuing in the red for the foreseeable future. A stark contrast to the debt and deficit rhetoric with which this government came to power.]

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"The words that did get uttered, over and over again, were “cost of living”. He blamed “events abroad” for pushing up prices, rather than flat wages making life less affordable…”

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[I haven’t seen the apparent contradiction in the Treasurer’s statements called out. Our economy is resilient, but also struggling under the weight of external factors driving inflation. Surging back to life, but wages are going backwards…]

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[The contradiction that has been picked up is that the economy is going great, but also we’re in a crisis and shouldn’t change hands on the tiller just yet.]

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"Clearly, both sides of politics perceive the political need to pacify the electorate. But two big questions lie beneath: Are people really doing it that tough, and when will wages rise?”

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“He [Mark Wooden] doubts things are really as bad for most households as the surveys suggest – including the consumer confidence survey done by his own institute. He notes that what people say in surveys is quite different from how they behave.”

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[Wooden is a professorial research fellow at the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne. He is also director of the long-running Household, Income and Labour Dynamics in Australia (HILDA) survey project.]
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"“Economists would say: look to revealed preferences rather than stated preferences,” he says. “So, look at retail sales. That’s a good indication of consumer confidence, not the consumer confidence indexes. And that’s just booming in the past couple of months.”
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"Wooden thinks the expressed concern about the cost of living is possibly an indicator of a broader “psychological distress” engendered by the constant crises of the past couple of years.”

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[And maybe, that concern is being driven by segments of the media, and the repeated headlines of housing affordability and rising fuel prices…]

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"“In the Covid period you had that massive, temporary increase in unemployment benefits. … Simply, they weren’t living in poverty. Their incomes were close to doubled for six months or so.”

And then it was taken away, and they went back into poverty.”

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[I don’t think we’ve yet addressed the mass trauma inflicted on this segment of society as a result of the decision to scrap the JobSeeker increase. Poverty is soul-destroying and deeply shaming.]

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"Indeed, Saul Eslake, an independent economist and vice-chancellor’s fellow at the University of Tasmania, says a lot of people did very well out of the Covid-19 stimulus measures, with the result that the economy is “by almost any measure, doing very well”.”

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"He continues, “And on top of that we have, to quote Paul Keating’s famous phrase, once again been kissed on the arse by a rainbow in the form of huge increases in the prices of our major exports.””

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"“Households have racked up an additional $250 billion in bank deposits since the onset of Covid. That’s a 25 per cent increase. And, more broadly, personal wealth has increased by $3.7 trillion since December 2019,” Eslake says.”

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"“That has been by no means evenly distributed. People in the bottom two quintiles – 40 per cent of the income distribution – probably have been going backwards.”"

[Which brings me back to my earlier point: the economy is working as designed. That design needs to be changed. This next government needs to begin the work of turning this around.]

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"“And that’s largely due to the housing boom, because older people are the only ones whose home-ownership rate hasn’t fallen over the last 30 years. Home ownership is the lowest in 60 years,” he [Eslake] says.”

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"The official statistics might say inflation is at 4.25%, but cost-of-living pressures fall far more heavily on some people than on others. If you can work from home, and take only short trips out or drive an electric vehicle, the price of petrol is not much of a concern."

"But while the jobs growth is happening, the pay growth isn’t.

Part of the reason, says Eslake, is that Australia’s industrial relations system, the Fair Work Act brought in by the Gillard government, has very effectively reduced the bargaining power of workers.”
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"About a third of workers’ wages are tied to enterprise bargaining agreements, renegotiated every few years. Another 25 per cent are covered by the Fair Work Commission, “and they only change every year”.”

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"So, even if Frydenberg’s promise of higher wages comes to pass, it won’t happen for a while. Certainly not between now and the election.”

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[We need to get back to a view of the economy as something that works for people; not the other way around. We need to address the drivers of wealth and income inequality, and think of what it means for Australians to thrive beyond the concept of work.]

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