Greatra Mayana

Career & Employment Opportunities

Australian Household Wealth, Negative Gearing, Richest Professions, and Wage Stagnation

Australians are feeling poorer as usual. In the December quarter 2018, taking into
account inflation, Australians have lost about $310 billion in household wealth, which is
made up of about $170 billion of losses on land and dwellings, and $140 billion on financial
assets. This is the biggest quarterly fall since 2011
and is the second such fall in two consecutive quarters. That is, we’re in some sort of per-capita
recession. Most of this fall is due to the declining
housing market, but a large part of it is due to the 10% fall in the ASX over the December
quarter. Not to mention household debt. While household wealth has been falling, household
debt has been soaring. The household-debt-to-income ratio hit a new
record just shy of 200%. Loss of wealth. Increased debt. It’s an Australian crisis waiting to happen. Naturally, jobs in the housing sector are
falling. They fell by over 7% last year. The manufacturing industry is unsurprisingly
in free fall. It fell by over 9% year-on-year. Retail trade’s not faring well either, falling
by about 3.5%. If you’ve been seeing lots of small businesses
closing down of late, this is probably the reason. Surprisingly (or maybe not), the highest growth
in jobs was in Public Administration and Safety. I suppose we need lots more government employees
to tell us what we’re doing wrong and to make sure that we keep ourselves safe by wearing
bicycle helmets, yellow vests, plain-packet cigarettes, internet filters, and making sure
our kids don’t do cartwheels at school — because we all know that doing cartwheels is one of
the most dangerous things you can do, right? Right?! The Australian Labor Party, if elected, promise
to scrap negative gearing by January 1st, 2020. The changes would stop new investors from
deducting rental losses from their income tax, raising an estimated $2.9 billion over
four years. Labor have argued that negative gearing is
too generous and is unfair because it makes it harder for young Australians and first
home buyers to buy a home. The ALP have also announced that they will
reduce taxes for institutional investors that build rental properties. Shadow Treasurer Chris Bowen stated: “This means that eligible build-to-rent
investments will pay a 15% tax rate, not the 30% rate proposed by Scott Morrison, which
would be double the rate paid for investments in shopping centres and office buildings. It will make a build-to-rent [project] viable
in Australia and provide a tax rate in keeping with the treatment in other countries.” With regards to taxes, the RBA has also put
their two cents in and stated that Australian households are feeling poorer due to increasing
personal taxes. They said that over the past year, personal
taxes increased at around twice the rate that household incomes did. Households are now paying the highest percentage
of their income in taxes since early 2010. Consequently, this may all be weighing on
consumer spending growth, which makes up about 60% of Australia’s economic activity. The Reserve Bank’s assistant governor (economic),
Luci Ellis, said: “Income payable — the things deducted
from gross income to calculate disposable income — increased by nearly 6% in 2018. This was significantly faster than growth
in gross household income. Taxes paid by households increased by around
8%, more than double the rate of growth in gross household income of 3.5%”. So basically, the average Australian’s tax
bill has been growing at a much faster rate than their income has over the past five years. With regards to the Australian Tax Office,
Dr Ellis said: “The Tax Office reports that its efforts
to raise compliance around work-related deductions have boosted revenue noticeably. The next wave of this effort, focused on deductions
related to rental properties, could result in further boosts to revenue.” So yes, whether you feel poorer or not, the
ATO are keen to get more of your money. Speaking of wealth, data has been released
by the ATO that shows the highest income earners from 2017. Unsurprisingly, surgeons topped the list at
almost $395,000 per year. Anaesthetists came in second at around $367,000. Third was internal medicine specialists at
about $299,000. Fourth on the list was financial dealers at
about $261,000, and finishing off the top five was psychiatrists at an average yearly
income of around $216,000. Towards the bottom of the list were farmers
only averaging around $22,000; forestry or garden worker trainees averaging a touch below
$20,000; hospitality employees and apprentices at around $19,000; and the lowest-paid profession
was fast-food cooks averaging around $18,500. It looks like any job to do with food in Australia
isn’t paid very well. It’s a shame that farmers are paid so little
seeing that everyone in Australia requires food. However, not everyone requires a psychiatrist
or a financial planner. One must question how these priorities came
about. Australia’s poorest postcode is 2308 in NSW,
which includes Newcastle University and Callaghan with an average taxable income of only about
$20,500. Postcode 4611 in Queensland covering the areas
of Marshlands and Mondure came in second lowest at around $23,000. Victoria’s 3482, covering the towns of Watchem,
Watchem West, Morton Plains, Warmur and Massey, were the third lowest averaging around $24,000. Towards the top of the list, Sydney’s 2027,
which includes Darling Point, Edgecliff, HMAS Rushcutters, Point Piper, came in third with
an average income of around $188,000. Melbourne’s 3142 was second, which includes
the suburbs of Toorak and Hawksburn, with an average income of around $194,000. And the richest neighbourhood in Australia
was postcode 2108 in Sydney with an average income of around $230,000. This includes the suburbs of Coasters Retreat,
Currawong Beach, Great Mackerel Beach and Palm Beach. Yes, if you’re a rich Australian, you live
on the beach in Sydney. I told you Australians like beaches, right? Despite all these rich people, Australia has
endured it’s seventh consecutive year of wage stagnation. Average Australians are just not getting meaningful
pay rises anymore. The leader of the Opposition party, Bill Shorten,
has pledged that the next election will be “a referendum about wages” and there will
be a focus on “who the economy should work for”. The Reserve Bank Governor Phillip Lowe has
declared a “low wage crisis”. Since the mid-1970s, the share of GDP from
Australia’s labour force has declined by 11%. That is almost perfectly reflected in the
increase in corporate profit share which is up by 10% over the same period. Corporate profit share is now nearing record
highs. In Australia, employees have pretty much lost
any sense of power in the workplace. Companies are now dictating how high (or low)
wages should be, and they are simply not increasing them enough to keep up with the cost of living. Collective bargaining is not quite dead, but
it’s certainly faltering. Only about 1.3 million private sector workers
are covered by a current enterprise agreement. Apparently, “private sector EA coverage
has collapsed by 40% in just the past four years”. Workers are losing their power and lack the
capacity to bargain collectively for better conditions. Just look at child care workers. Larger companies have found an efficient way
to effectively restructure the system in their favour. They do so by splitting their labour into
smaller and smaller components using franchising, supply chains, labour hire and most recently,
digital platforms in the gig economy such as Uber and Deliveroo. Do you think an Uber driver or a 7-Eleven
worker has any ability to negotiate their wages? I doubt it. I’d say their boss is of the opinion, “If
you don’t like it, go find another job!”. The Centre for Future Work has recently analysed
ABS data and found that for the first time in recorded history, a minority of Australian
workers enjoy permanent, full-time employment with access to sick leave and holiday pay. They said: “Insecure forms of work including part-time,
casual, temporary, fixed term, gig work and other contracting now account for a majority
of work in the modern labour market.” In addition, employees have few laws to allow
them to demand better wages by engaging in industrial action. The report said: “Only industrial action that doesn’t have
a significant economic impact is usually permitted, begging the question: what’s the point?” Some employees have been sued and punished
for attending protests, wearing union insignia, and even swearing. Under the weight of the currently flawed bargaining
and regulatory system, industrial action to support better collective employment conditions
has plummeted to historic lows. The poorest employees in Australia no longer
have a “living wage”, but a “bare minimum wage”, which is barely enough for them to
pay the rent and put food on the table. What’s going on in Australia? Why are there so many people struggling in
a so-called “prosperous” country? Are we still the “lucky country”, or is
that just an oft-repeated moniker to keep the masses happy? What are you thoughts? Let me know below.

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