Cost of living crisis revisited

In the 12 months to March 2008, meanwhile, electricity rose 10.5 per cent, and bank fees went up by 7.6 per cent.

Variable interest rates of Australia’s banking oligopoly, in particular, have been rising well above official RBA (Reserve Bank of Australia) rates. The banking sector should be expected to exercise social responsibility - especially in the face of probable economic contraction.

While bank share value has declined, bank profits are still strong. In August, for example, the Commonwealth Bank registered profits of almost $4.8 billion. All in all, this raises the question as to whether the Rudd Government ought to consider the re-establishment of a public sector bank to provide real competition and counter profit-gouging and collusive practices.

Beyond this, industrial relations and minimum wages, as well as tax and welfare reform must be at the heart of any effort to respond to the cost-of-living crisis.

Overall, the wage share of the economy declined from 70.6 per cent of GDP in 1999 to 66 per cent in 2007 - representing over and above $2,000 a year.

This year the Australian Fair Pay Commission (AFPC), ruled in favour of an increase of only $21.66 a week for low-paid-workers, which does not even keep pace with inflation. The ACTU had called for a minimum wage increase of $26 a week.

But Margarita Windisch, writing for Green Left in July 2008, argued that “To cover the real cost of living increases for low-income workers, the minimum wage needed to be increased by 6 per cent, or $31 per week”.

Clearly, there is a need for wage justice especially for the low paid: and increases in the overall cost-of-living need to be met with welfare reform - not just “some time in the future” but immediately.

The compassionate and just response to inflation is not to impose wage restraint - especially for the low-paid - but rather ought to involve tax reform, increasing the relative share of burden in combating inflation for those most able to afford.

Accompanied by such tax reform, greater wage justice - and a greater wage share -should be secured for those on middle, minimum and low incomes. Enabling workers to bargain collectively must be part of this strategy - including acceptance of the legitimacy of pattern bargaining.

Complementing such strategies, Australia’s tax free threshold should be raised and means tests relaxed for those on low incomes.

Finally, in the face of the cost-of-living crisis, there is a strong case to be put that full pensions should be raised to 30 per cent of Male Average Weekly Earnings (MAWE) (up by 5 per cent of MAWE or more - to $646.16 a fortnight).