Collapsing Living Standards

Ultimately, Labor is losing the political argument because of the severity of the economic crisis. While not technically a recession because economic growth is not contracting, living standards are collapsing. It is fair to say that most of us are experiencing the kind of “pocketbook depression” that Europeans and Americans experienced following austerity cuts implemented in response to the 2008 global financial crisis. At the time, Australians were lucky to be spared these impacts by the foresighted anti-austerity response of Kevin Rudd’s Labor government. Now, however, our luck has changed.

It’s a story best told in statistics. Since the June quarter of 2020, real wages have declined by 7 percent, the largest decline on record. This is partly driven by out-of-control increases to the cost of essential items. Gas is up by 26 percent, while electricity, dry goods, cereals, and dairy have risen by 15.5, 11, 12 and 15 percent, respectively.

Housing affordability is a particular focal point of the crisis. Capital city apartment rents increased six times faster than wages in the last year, while rents for houses have increased three times faster. The average share of disposable income spent on housing costs is now 25.1 percent, up from 16.7 percent in 2021. Already, 20 percent of all people who rent in New South Wales are below the poverty line.

And it’s only going to get worse. In May, governor of the Reserve Bank Philip Lowe told the Senate Estimates Committee that he expects rents to increase by another 10 percent over the next twelve months. For those Australians lucky enough to own the home they live in, a “mortgage cliff” is expected in September when fixed-rate loan terms expire. This is expected to push the average home owner’s repayments up by $891 a month.

In short, almost everyone who works, rents, or has a mortgage in Australia is poorer than they were last year — and unless something changes, they will keep getting poorer.

For young Australians, there is a sense of accelerating civilizational decline that isn’t quite captured by the statistics. All around us, we can see our society deteriorating. Everyone under forty knows friends and family members who have chosen between absorbing rent increases amounting to hundreds per month or moving back home. The alternative is couch surfing — or worse. Tent cities have started forming in inner-city parks, full of residents in full-time work.

And almost everyone has had to cut back on nights out or on eating what we want to eat. Many are forced to choose between paying for medicine or paying rent. And even those who are comparatively secure have had to cut discretionary spending. No one is immune and everyone is stressed out of their minds.

Labor’s Response Is a PR Strategy

Labor has responded by implementing what amounts to an austerity budget while simultaneously claiming that it’s taking action decisively to address the crisis. It’s essentially a public relations strategy — and not a terribly sophisticated one either.

This PR approach boils down to making new spending announcements with big-sounding dollar figures while relying on the media to not analyze the policies further.

For example, take Labor’s announcement that it will spend $4.9 billion on increasing JobSeeker unemployment benefits. This amounts to $2.80 a day. Similarly, Labor’s boost to Rent Assistance payments will cost $2.7 billion, resulting in a $1.12 a day increase. One-third of Australian households rent their home — as they know firsthand, to call it a Band-Aid on a broken leg is a disservice to Band-Aids.

Labor has also been disingenuous, hoping that spin will be enough to save its fortunes. For example, the government claimed it would save bulk billing, restoring the access to free primary health care, which Australians consider a right. In fact, it has only increased the bulk billing incentive for children under the age of sixteen, pensioners and Commonwealth concession card holders. This excludes the vast majority of Australians, including the working poor, effectively formalizing the end of universal public health care. This also exposes Medicare to right-wing grievance politics by feeding middle-class resentment that tax dollars are being used to subsidize health care for the supposedly lazy and poor.

The proposed Housing Australia Future Fund was to be a key part of this smoke-and-mirrors show. Although it will only pay a guaranteed $500 million per year on housing, Labor tried to spin HAFF as $10 billion in funding. In reality, that’s only the figure the government wanted to gamble on the stock market. Worse, according to Labor’s original proposal, if the investment were to lose money, it would not be required to disburse funds on housing at all. If the performance of the existing Future Fund is anything to go by, that was likely — last year, the fund lost 1.2 percent, which would have meant no money for housing. On top of that, the proposed HAFF will only begin spending in 2025.

Labor also claimed that the fund would be able to finance the construction of up to thirty thousand homes. This figure appears to have been made up, and it was a lazy lie at that. It presumes that a home can be built for $72,000, land costs included. In no Australian capital city is this remotely possible.

As consequence of the Greens’ campaign, Labor has made some minor concessions, the most significant of which is $2 billion in immediate, direct funding. But even this will not begin to reverse the shortfall of social and affordable homes which currently stands at 640,000 homes and is projected to worsen over the next five years.

All of this is a political choice. During the worst housing crisis in generations, Labor is pushing ahead with stage three of Scott Morrison’s tax cuts. These will cost the federal budget $254 billion over the next ten years, with 80 percent of the benefit flowing to the top 20 percent of taxpayers. Albanese has also locked the government into spending $368 billion for nuclear attack submarines under the AUKUS deal.

By contrast, the government’s own housing experts say that it would take $15 billion per year to solve the housing crisis. Labor could easily afford this if it chose to do so. Instead, Labor is trying to fool voters into thinking that it is taking action — and hoping that the government will avoid their anger.

Voters Aren’t Buying Labor’s Spin

Labor’s PR strategy is not working. The Guardian’s Essential Report this week confirms that 75 percent of voters think Labor is not doing enough on the cost of living.

By contrast, Greens proposals are gaining traction. For example, Greens MPs have campaigned for a two-year national rent freeze followed by ongoing rent caps. As an example of how this can work, they look to the Australian Capital Territory, where, from 2019, the Labor-Green government limited rent increases to 1.1 times the customer price index, or CPI, per year and banned no grounds evictions from April this year.

As a result, over the past year, the median rent in Canberra fell 1.9 percent. Contrary to the federal government’s fearmongering, these reforms have not driven landlords to withdraw their houses from the rental market.

Labor has also claimed implausibly that the federal government has no power to impose a national rent freeze. However, from the beginning, the Greens have demanded that Albanese coordinate with state governments — which are all Labor-controlled, barring Tasmania — via the National Cabinet to introduce a rent freeze followed by rent caps harmonized across the country. These proposals make sense and are popular because they will materially improve the lives of renters. This means a good deal more than Labor’s false hope.

Indeed, Greens housing spokesperson, Chandler-Mather, has positioned the Greens as the party that champions the interests of renters. So far, his approach has been a lesson in principled, left-wing mass politics.

Before the HAFF came to a vote, the Greens made it clear that unless Labor agreed to direct spending on public housing and a national rent freeze, they would use their numbers in the Senate to block it. They backed up their stand by door-knocking in Labor electorates to explain why the housing fund is inadequate and to build their support base among the one-third of the country which rents.

They won the political argument. Polling showed that by the end of May, 60 percent of voters backed the Greens’ call for a national rent freeze. After months of saying that it was “absurd” to demand direct spending on housing, moments before HAFF came up for vote, Labor buckled and promised to immediately and directly spend $2 billion on social housing.

Presumably, Labor expected the Greens to bank the concession as a win and back the bill. When the Greens refused to buckle, it triggered Albanese’s ballistic question-time tirade against Chandler-Mather. But the PM’s reaction was more than an unconvincing misrepresentation of the Greens’ position — his bluster also suggests the weakness of the government’s position. That’s why the best thing the Greens can do right now is refuse to blink and keep building public pressure on the government for a national rent freeze.

Indeed, even mainstream media commentators now consider it possible that we are on the verge of a major political shift, with renters forming an expanded constituency for the Greens. If this prediction plays out, it will largely be thanks to the mass-politics strategy championed by Queensland Greens like Chandler-Mather.

Indeed, this strategy works because it sees short-term demands like a rent freeze as part of what Brisbane Greens member Joanna Horton has called a “broad, transformative vision for changing society.” This contrasts sharply with the traditional Greens approach of moralizing about refugees and the climate crisis, a strategy that saw the party fail repeatedly to break out beyond 10-15 percent of the vote.

Combined with mass door-knocking, the Greens’ more combative left-wing program threatens to de-align renters from the Labor Party, toward the Greens. It’s working because it will obviously improve people’s lives. And when all that Labor has to offer is spin, bullying, and endless rent increases, Albanese is right to be worried.