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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