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Money Aussie household incomes take another hit despite the boom

03:31  04 july  2018
03:31  04 july  2018 Source:   crikey.com.au

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  Aussie household incomes take another hit despite the boom © Provided by Private Media Operations Pty Ltd.

Families feeling the squeeze — between bills that keep going up and incomes that don’t — are not imagining it. The Australia Bureau of Statistics has released figures showing family incomes in steady decline.

The bizarre thing is that this is happening while corporations are generating record profits, top end salaries are at all-time highs, Treasurer Scott Morrison is bragging about national income and the whole world is in a strong upswing in trade, jobs and economic growth. “Household gross disposable income” measures the cash Australian families and individuals receive from all sources — jobs, investments and other streams — after paying taxes and the Medicare levy.

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This is the key indicator of the share of the nation’s income going to ordinary Australians. The ABS measures this quarterly in series 5232.0, “Australian National Accounts: Finance and Wealth”. Since record keeping began, the amount that families have been free to spend has increased steadily nearly every year. This is the one variable almost completely resistant to droughts, floods, recessions, changes of government, jobless rises and falls, and housing booms and busts.

In the last 30 years, there have only been six 12-month periods when money available to spend has declined compared with the previous year. Four have been since the 2013 election.

What the data shows us

Disposable income in the four quarters to December 2015 fell below the total for the four quarters to December 2014. That was only the third time on record that this had happened. The first was in 2002 during the early 2000s recession. The second was in 2009 at the depths of the global financial crisis. Incomes rebounded swiftly both times.

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But following that curious negative year to December 2015 — when the world was in strong recovery from the GFC — there was another, in the year to September 2016. And then two negative years in a row: to June 2017 and to September 2017. The latest result, a positive growth of 0.93% to March 2018 is a welcome return to the black. But it is the 10th consecutive quarter with the increase either negative or positive but below 1%. The longest streak before this was just two consecutive quarters below 1%. This occurred once during the GFC and once during the early 2000s recession. Not at any other time.

Income per household

For the nation overall, income fell in the March quarter to $289.8 billion. That follows a hefty fall the quarter before, down from $306.7 to $302.2 billion. Hence, the decline over six months was $16.9 billion.

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More useful figures emerge, however, when we match national income against the number of households.

Using ABS household data, disposable income is now just $30,267 per household per year. That is below the $30,805 at the September 2013 election. It is well down from $32,344 six months ago, when things appeared, deceptively, to be improving. Allowing for inflation — stuck at 1.9% — households are much worse off than during the Labor years.

Total national savings

According to the latest ABS release, savings for the whole nation for the March quarter was a modest $18.8 billion. That is well below the $26.1 billion at the time of the 2013 election, and not much better than half the peak of $33.1 billion back in 2011.

Household savings

Net savings by households decreased for the fourth consecutive quarter to a disastrous $5.5 billion, the lowest level since March 2008. This is close to one-third of the level at the 2013 election — $15.6 billion — and just over a quarter of the 2011 peak of $20.4 billion.

How has this happened?

Clearly, virtually all the impressive increase in the nation’s income since the Coalition came to office has gone to the big corporations or high income individuals or offshore rather than being shared with families.

Intentional or not, this has been the outcome of changes to wages policy, tax collections, welfare and economic management overall.

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