money
8 Apr 2008
Poor Little Rich Kids
Doin' it tough
Why have years of tax cuts, baby bonuses and rebates not helped them keep their heads above water? Gina Marich on the plight of Australia's middle class battlers
Despite a few hiccups and burps from that jittery little market, few would argue that Australia is in a state of economic bliss and prosperity. The Australian Bureau of Statistics finds that we are richer and more educated than ever before; there are more jobs than there are locals to do them and despite increased interest rates you don't see many families sleeping in their cars or rummaging barefoot through Salvation Army bins. On top of our good fortune, we are about to receive Kevin Rudd's promised tax cuts to the tune of $31 billion.Nonetheless, one in four people surveyed by Sensis consider themselves financially worse off than last year, and many are losing confidence in the economy. Australian society is cynically described as a divide between the "haves" and the "have mores" but for some reason, people on the street aren't feeling it.
A 2007 study by the McCaughey Centre for the Promotion of Mental Health and Community Wellbeing highlighted a disturbing trend. In a survey of 24,000 adult households in Victoria, 6.1 per cent said they had run out of food in the past 12 months and had no money to buy more. RAN OUT OF FOOD! In a country where there is such an excess of food that corporations are falling over themselves to invent new ways of making us buy it. (Passionfruit Tic Tacs? Cornflakes frosted with chocolate? Mint banana anyone?) This is an appalling state of affairs.
The most surprising aspect is almost half these respondents were employed. Are we seeing the emergence of a new working poor?
Put your ear to the ground in any bar or other meeting spot and you'll hear the same story - everyone seems to be struggling. From the far flung outer ‘burbs of Kath & Kim to the inner city, people seem to be running out of cash and are crushed by debt - many of them on salaries that are enough to feed a Rwandan village. So, where are these new "Aussie Battlers" and why have years of tax cuts, baby bonuses and rebates not helped them keep their heads above water?
I recently met Kat, a stay-at-home mother from Yarraville in Melbourne's inner west. Her husband and two young children live on his academic's salary of $75,000, but by the time the mortgage repayments, HECS debts and household bills are paid off, the family often find themselves with nothing to live off.
"We've never run out of food or anything," says Kat "but we pretty much have to live on credit."
Another friend, Max, is in circumstances that appear as dire - he earns $65,000, pays $180 a week rent and has no one to support. Yet Max complains about struggling and is considering moving to a place where the rent is cheaper.
Max says he doesn't buy a lot, but admits to living a lavish lifestyle - dinner at a restaurant becomes a feast where the old vodka tonic is replaced by boutique beer or cocktails at $17 a pop and appetisers as well as desert and entrée are mandatory. His very suave appearance incriminates him as an obsessive clothes buyer.
Max doesn't see these as luxuries; they are necessities if you want to fit in, have a good time and see your friends.
The Household Expenditure Survey, conducted over 2003-04 by the Australian Bureau of Statistics, reveals some interesting trends in the spending patterns of Australians.
For a start, we really are richer than ever. Over the past 20 years, household expenditure and income increased by 147 and 148 per cent respectively but inflation was lower, at 117 per cent, meaning there's more money in people's pockets.
Apart from a dramatic increase in what we spend on housing - which the ABS attributes not to rising rents but a trend towards bigger houses with fewer people living in them - we're spending a lot more on "wants".
Since 1985, the amount we spend on eating out has risen by 30 per cent. Spending on furnishing and household equipment rose by 80 per cent, partly due to the fact that more houses now have dishwashers, air conditioners and two or more fridges.
Having more money means we take non-essential items to be absolutely indispensable to our well being. People may find they wake up in the middle of the night screaming and in a cold sweat because they don't have a stainless steel kitchen. So while we have enough to spend, many people feel the pinch more than ever.
Professor Bruce Heady from the Institute of Applied Economics at Melbourne University says the connection between national prosperity and individual poverty is not hard to draw.
"A boom in housing increases confidence ... people take on the highest value house and they can afford it unless something goes wrong," he says, "and often it does go wrong."
Nothing could be truer in these gloomy times of credit crunch and rising rates.
Heady believes consumer confidence as well as middle class subsidies such as the Family Tax Benefit and rebates on private health care have made people cocky when it comes to borrowing. And how we have borrowed: in 2007 household debt averaged 160 per cent of household income around the country.
This increasingly "struggling" middle class explains what Clive Hamilton, former Executive Director of the Australia Institute, describes as "the transfer of welfare payments from those in genuine need to perhaps those who don't need it".
Hamilton argues that tax benefits and other subsidies aimed at middle income families were a political ploy that panders to whinging "battlers" who aren't battlers at all.
"It's a way of pandering to that sense of grievance which is held by people who are relatively well off," Hamilton says.
These numbers and testaments point to one thing: we expect too much. There is no denying that some people are genuinely struggling, and they'll probably continue to struggle as the full force of rising interest rates hits.
But the issue is that we are constantly told to keep spending. Slower economic growth is confused with complete downturn - as the sallow faces of the Reserve Bank board when they forecast only 2.2 rather 2.4 per cent growth in GDP will demonstrate.
When we are bombarded by messages about falling retail spending or a downturn in the housing market, the implication is that spending is not our choice, but our duty.
We live in a warped culture where, as Oliver Stone said back in the 1980s, greed is good. Spend not for yourself we're told, do it for your country.
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Don’t forget, of course, that these families have also been encouraged to believe, by successive governments, that they must pay for their child’s education and that the more they pay, the better the parents they are.
The much vaunted "user pays" is all about youse paying. We thought it’d save us money, but, of course, it doesn’t. It simply transfers the weight of payment from those who can afford it to those who find it much harder.
You could double the household income of every Australian family tomorrow and within a year or two we would be back in the same position – households over-extended and complaining how tough it is.
It’s time to change direction.
Individuals need to stop chasing illusory happiness through endlessly buying material goods. Government, while still ensuring a reasonable standard of living particularly for the bottom twenty percent who do struggle, needs to focus policies in directions that improve our quality of life – reducing stress and increasing personal contentment. One significant step would be to develop mechanisms other than GDP to determine how we are “progressing” as a society.
Currently our income is about $55000 per year. To live within this income we share a house or we could we rent a two-bedroom unit, we sent our daughter to a State school and have no after school activities, we go out to a restaurant or café or the movies about once a month. We buy all our clothes from opp shops or Kmart, not boutiques. It goes without saying that we do not use air conditioning and the house has no dish washer. Unfortunately there are no schools walking distance from the house because we had to take what we could afford, so I have to drive my daughter to school everyday. We could catch the bus but it would be a one hour trip, instead of 15 minutes.
I thought my life would be at least as good as my parents and it’s not. We can’t afford to borrow money to buy a house, to have private health insurance (so no dental for me or my husband unless it’s an emergency), everything we own is second hand and our landlord thinks we are scum because we don’t have shiny new Ikea furniture. He recently tried to illegally evict us. We are the middle class whingers and there’s plenty around like us. Yes we have a roof over our heads and enough to buy food and I guess we should be grateful!
"I thought my life would be at least as good as my parents and it’s not."
The problem is, our parents were living an unsustainable lifestyle at the expense of the planet, and if you look at it in a little more detail, at the expense of people in other countries as well.
At least you have the option of a school for yout daughter, at least you have Medicare, at least you have legal protections against being evicted. There are plenty of people around the world who would love to give their kids an education, but don’t have the option. Who get sick and have no access to a doctor. Who are homeless.
We have it pretty damn good in this country, and if sometimes we have to watch what we spend and not buy new clothes, and can’t afford a dishwasher, well - poor, poor us. Not.
Hi,
I’ve been on a centrelink income for all but four years and two months of the time since I moved away from my parents house as an eighteen year old, still at school, in 1986. Of those four years and two months only two years were working full time here in Australia, and the other two were overseas. In addition to that my family background is very well educated, my mother a school teacher and my father has a PhD. So I am certainly in that category of people receiving centrelink benefits who are likely to be able to get out of the poverty cycle. My children are 16, 13, and 10, and I am a full time student and a pensioner. Poverty has not prevented me from being a well informed Australian who makes a positive social contribution, as a volunteer, in many various capacities.
However, the harsh reality is that the social differences between my self and those of my peers who have always been employed, increased markedly for the whole of the Howard governments term in office. The difference might at first seem to be only affordibility, however, scratch the surface and it transpires that it is a difference of social status and acceptability. When is it socially safe, for example, to meet a friend at a coffee shop and only ask for a drink of water while the friend eats? Those sorts of differences cause that for many Australians, just to have safeguarded the social status of their children, there is more pressure to work over time etc, but then costs increase also. To my own perspective, there is certainly an affluence cycle of working for money above working at what we really want for our lives, which is potentially as detrimental as the poverty cycle. It all depends upon how we, as individuals, are managing to hold our heads above water.
In these years on a low income, I have made vegetable gardens and feed four of us on $30 per week, because I had a very productive vegetable garden, which might have cost no more than another $20 per week overall, including the pond and flowers. I have saved up the camping gear to take my children on camping holidays. And I have had to work doubly hard to prove that I am as good as the neighbours with two professional incomes, under the Howard government.
But what is more noticable, is that if ever it is necessary to approach one of the charities for food, under the Howard government there was a terrible stigma attached to that, which is not the case under either the Hawke government or the Rudd government. Howard’s government caused a social stigma of being a bad parent, and of over exposing children to abusive situations, if ever a parent needed to ask for any assistance from the charity sector.
The evidence is clear down at street level, already more women are feeling safe to flee from domestic violence, because the negative brandings attached are less, and more junkies asking for help to get into detox, and more youth being able to talk about what their lives have been like. Not because it is immediately worse not that Labor have been elected (despite what the co-alition efforts are attempting to depict), but because now, immediately that the Labor party won office, it is safe to mention what we need protection from, without becoming branded as having caused our own problems wantonly. The most immediate difference seems to be in how the police regard their work, and the actual delivery of the statement of ‘Sorry’, has made and equitable difference as elections can. There is something about the general flavour, of acknowledging that oppression is caused by who blames the oppressed, rather than by who is being oppressed, which can lift the standard of living, at a lower monetary cost, for everybody.
Thanks for reading.
Word Sword Sworn
At Hath
That Hat
Inshallah no poetry farce
By Solomon’s Seal will my past
No word not true can last
Some people think the welfare state is only for people who don’t get off their backsides, and who get offended when the authority bankrolling them to live in the fashion they have become accustomed to,(The tax payer through Centerlink) ask them what attempts they have made to find employment.
Sure if you leave a pet dog a whole lot of food for a long weekend, it will eat it all on the first day, and go hungry til its owner comes back. So be it with any hand outs.
OK governments in both federal and state, (forget what they are nominally called), "Labor, liberal, tweedle dee, tweedle dum, tweedle dummer". They aided and abetted our kids to buy in over their heads into the housing market, and cut them free to languish in increasing interest rate mortgages.
Howard was a "free market" advocate, not intervening in the economic shark pool and jungle of unlevel playing fields.
Now we have the surreal scenario of a Labor governemnt coming to power and blaming the preceding mob of profligate and spendthrift activities. Usually its the other way around when the Libs came in, they levelled the same accusation against Labor.
Then comes the predictable statement from the incoming government that "THe situation is even worse than they had imagined, and now that they have access to all the data, they will not be able to fulfill all their promises.
Don’t look at what the Party calls itself, look at their social welfare records.
Look at their economic reforms. How much deregulation (washing their hands of any responsibility) of the financial markets and banks they implement.
Since Rudd Gillard and Swann got in, not only have interest rates not steadied, but they have been rising exponentially, and Mr. Swann does’nt seem to have any macroeconomic understanding at all.
The only prices to fall are from the fire sales of failed businesses. Otherwise inflation is growing and stagflation is threatening the GNP.
If Rudd succeeds in alienating China altogether we will lose our only saving grace, steel export. Then we will finally realize Paul Keating’s dire warning that we were heading for Banana republicanism.
What is with Rudd and his slavish duty to his State of Queensland.
NSW has a female governor too, Ms Bashir, why should Bryce be appointed as GG over her? Even if Queensland is bigger than Texas, AYE AYE Captain!
The moving finger writes
And having writ moves on
Nor all thy piety nor wit can lure it back
To cancel half a line
Nor all thy tears wash out a word of it.
"The rest of the population does not have much of a role in the economy."
Except as consumers and forced superannation contributors which ensures that the shareholding idlers gain wealth without work.
The "battler" concept has become a semantic confusion. While the articles Kat is genuinely financially stretched Max is simply self-indulgent and unwilling to face up to his (comfortable) financial realities. The infantile sense of entitlement that motivates people like Max is a personal, psychological problem not a social or economic one. While I understand the arguments about wider forces pushing consumption it is rather pitiful to claim that these forces are in some way irresistable and to then pity yourself or others as ‘victims’ of them.