Putting the 'Labour' back into Labor.
'The working class can kiss my ... 'etc
https://ipa.org.au/research/australias-prosperity/middle-class-dream-is-dying-as-it-becomes-more-difficult-to-get-into-and-harder-to-stay-inIn a speech given in October 2021, now-Treasurer Jim Chalmers argued that the “global middle class is getting smaller, older, poorer, less mobile, more difficult to get into, and harder to stay in.”He said that this amounted to a “broken bargain between leaders and the led.”The problem, according to Dr Chalmers, lay in years of economic mismanagement. “Before COVID, stagnant wages and flatlining living standards were undermining consumption, and investment. Productivity paralyses were delivering weak and uneven growth,” he said.“Just as the long post-war upswing in strong global growth created and then fed off a strong, vibrant and growing middle class, the tepid growth of more recent times has run parallel to the shrinking of the middle class.”This analysis was correct, all the data is there to support it. The cultural and political problem that Dr Chalmers identified has also been readily acknowledged by people on both sides of the political spectrum: a lack of economic opportunity and prosperity alienates the aspirational working and middle classes who may, in turn, become disenfranchised with the broader culture and political system they are living in.To address this, the Labor Party had developed “a plan to grow the economy by empowering more Australians to join and prosper in the middle class with confidence,” Chalmers said. “In the absence of a plan to grow the middle class, working people are merely shuttled from one kind of vulnerability and insecurity to another.”If Dr Chalmers and Labor had such a well-thought through plan to restore the middle class, one wonders why, after three years and two elections, they are now proposing a productivity roundtable and Anthony Albanese has recently called for the private sector to “resume (its) rightful place as the primary source of growth in our economy.”Australians could be forgiven for thinking that the roundtable and the Prime Minister’s statement are a search for an escape route from the nightmare they have foisted on Australia’s middle class.Taking the measures Dr Chalmers used for his analysis in turn, we start with wages. According to data from the Australian Bureau of Statistics, quarterly real wage growth has averaged -0.1 per cent since Labor was elected in May 2022. Dr Chalmers’ defined the 0.1 per cent per quarter real wages growth in the decade before COVID as “stagnant,” but at least they weren’t backward.The next measure is consumption; that is household spending with these lower real wages. According to the ABS, Australian households are spending about $19.5 billion more per quarter in March 2025 than they were in March 2022, growth of some 6.3 per cent. Unless you think that households spending more money servicing their mortgages, and paying more for electricity, fuel, and groceries from lower wages is a bad thing, this is one of the more promising measures of the group.Next, productivity. Using the simple measure of GDP per hour worked, it is true that in the decade before COVID, Australia experienced a “productivity paralysis,” averaging only 0.3 per cent growth per quarter. But this paralysis was better than what has followed under Dr Chalmers’ leadership; productivity growth of -0.3 per cent per quarter. Australians are working longer hours to get less done than we were before the Albanese Labor Government was first elected.The effect of productivity on our living standards is well established: higher productivity levels lead to higher wages and greater prosperity over time. This should foreshadow what has happened to Dr Chalmers’ next measure, GDP growth, which he highlighted had been lower “over the eight years of the incumbent conservative government” than it had averaged “in every decade since the Great Depression of the 1930s”. Since Dr Chalmers became the Treasurer, however, it has not only been even lower than under the previous government, it has gone backwards, averaging -0.15 per cent per quarter.While Dr Chalmers’ complaints about Australia’s stagnant economic performance before he became Treasurer were entirely justified, he has presided over the longest-running decline in Australian living standards since digitised records began in the 1970s.Dr Chalmers got the diagnosis right, but unfortunately for Australians he got the cure entirely wrong.Revitalising the middle class remains a noble objective. Given that Labor’s doubling down on the model of State-directed economic activity, ever-increasing regulation, emissions-first energy policy, high immigration, and a taxpayer-funded services economy —implemented with bi-partisan support for over two decades — has continued to hollow out Australia’s middle class, perhaps it is time to try something different.
