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Poverty: a disease that can be cured

Australia is one of the richest countries in the world. So it's a disgrace that as many as 23% of its people are living below the poverty line, or that after 12 years of 4% GDP growth, the real unemployment rate (including all those who want to work) is at least 12%.

In the 1990s the rich got richer faster than ever. In that decade, the richest 20% "earned" on average an extra $5800 — more than eight times the increase of $680 received by the poorest 20% (which was probably not enough to cover GST price increases).

In 2002, the chief executive officers of the 20 biggest corporations managed to scrape by on $8 million a year each.

Ten years ago the average house cost six times the average yearly wage. Now it's risen to nine times. Because of rising house prices — pushed up by speculative investment in housing for tax windfalls — the debt of households over the past 10 years has increased from 56% to 125% of their income.

Housing debt as a percentage of household assets has increased by 60% — even as public housing is deliberately cut back and run down.

Tax cuts under John Howard's Coalition government — continuing the work of the Hawke and Keating Labor governments — have all favoured the wealthy. The poor have been paying an ever-increasing share of the tax bill, especially since the introduction of the GST.

Cuts to company and capital gains tax and the availability of tax minimisation schemes all mean that the rich can avoid paying tax while workers can't.

Working women and women who want to work have suffered most. Under Howard's various tax cuts the effective tax rate paid by women who join their partners in the work force rises brutally, especially for those on lowest pay and with most children.

Combine this with Howard's cuts to childcare funding and it's no surprise that 29% of women not working or looking for work (around 700,000) cite lack of child care as the main problem.

This situation did not suddenly happen. It is the result of more than a century's capitalist accumulation of power and concentration of wealth. As a consequence, these inequities can only be eradicated through radical structural change.

The Socialist Alliance has worked hard to develop a blueprint for an alternative future for Australia built around a four-pronged offensive that combines job creation, a decent minimum wage and fair welfare and tax systems.

First, the vast store of wasted energy and creativity in people who are presently out of a job can be harnessed in two ways — through shortening the working week (without loss of pay) to spread around available work, and by building a modern, democratically managed public sector dedicated to solving the country's key economic and environmental problems — like its dying rural and regional economies, inadequate community services, inadequate rail network and scores of environmental crises.

Second, there's not much impact on poverty if new jobs are casual, part-time and poorly paid. So there's also a need to legislate a minimum wage at around 60% of average weekly earnings (about $560 at the end of 2003). This would lift the 1.6 million “working poor" in this country above the poverty line.

Third, the welfare system has to be rebuilt so that it provides a living income to all those who are unable to work. If Sweden, Norway and Denmark can afford social security payments that are above the poverty line there's absolutely no reason why Australia can't too.

Fourth, the tax system needs radical reform. At the very least this means scrapping the GST; returning the top marginal tax rate to its 1974 rate of 67% and lifting the income level to which it applies; increasing company tax to the top marginal rate; taxing capital gains as normal income; closing down trusts and tax shelters; increasing the tax-free threshold; and chasing tax cheats with the same energy that the Howard government now uses against those on welfare.

We also call for an end to the housing rip-off through a program of building quality public housing. The federal government should establish a publicly owned housing finance corporation to provide genuine low-interest loans.

Lalitha Chelliah

[The author is a national co-convenor of the Socialist Alliance and a Socialist Alliance Senate candidate in Victoria.]

From Green Left Weekly, July 21, 2004.