Most Australians know that the majority have been finding themselves worse off as the share of wealth drifts upward to the few richest in the country. The third edition of Monash University’s Transforming Australia report confirms that 40 percent of Australians have seen a fall in their share by almost a third since 2004. The top 5 percent hold 24 percent of the wealth, and the top 10 percent 57 percent.

The report makes it perfectly clear that unless reversed, the fall will continue, and Australia will lag further behind the rest of the developed world. Changing course depends on long-term planning, something that is spectacularly absent in the political system. More importantly, there is the lack of political will to be any different. This is the Canberra consensus.

Transforming Australia uses long-term data sources covering 80 indicators, including inequalities in income, housing, and health. The indicators show that 12.7 percent of the Australian population was already living below the poverty line in 2020.

The data compares with other similar countries like the United States, where, unsurprisingly, the gap is even bigger, and the one percent hold 34.9 percent of that nation’s wealth, and the top 10 percent hold 70.7 percent.

There is a limit on what the Wealth share tells us. Wealth refers to assets held rather than income. Assets in the hands of the wealthiest are income producing, from interest, dividends, rates, debentures, and speculative bubbles. The assets of the 1 percent are mostly of this type. Those in the 10 percent may have this advantage in part. The rest don’t have income producing assets.

A better measure of day-to-day standard of living is income. Here too the years have seen a shift upwards in Australia. By 2019, aa massive 93 percent of all income gains went to the top 10 percent, and the rest shared only 7 percent.

This reflects assets-based income growth next to stagnant wages.

Inequality of this sort increased during the Covid era, and has only reversed marginally since, well below the rate of inflation. Real wages have therefore fallen more than the nominal numbers suggest. And economists predict more pain in the time ahead.

The official poverty line in Australia is based on a proportion of nominal wages provided by the Australian Bureau of Statistics. The value of Australian wages has fared worse than in other comparative nations as the graph below shows.

The line represents the United States dollar and the green and red blocks the Australian changes at certain points. Note that through the years in question, the value of wage increases remained at much less than $5 a day, and well below the growth in the United States. More often than not, there was a decline during these years, and this trend continues. The only difference is that the gap has become bigger. Note that the Australian Bureau of Statistics provided the estimates.

This suggests that the rise in poverty is higher than that determined by those below the poverty line. A poverty line measured as a proportion of income means less when real wages are falling.

In addition to the failure to address this rising inequality, The Monash University report also shows big lags on progress on the other goals adopted by United Nations members in 2015, and to which Australia is supposed to be committed. Another area of underperformance is education. Maths proficiency, for example, has declined by 25 percent since 2018, and 34 percent since 2004. This is only a partial view of our overall performance as a nation.

Overcoming these problems, especially the growing wealth gap, depends on changing the nation’s priorities. Failure to do this promises to further erode trust in the existing political leadership and the political system. This fall in trust inevitably leads to pollical polarisation as the population seeks different answers.

We already have the start of this, and it will play out in the coming federal election. We don’t know how yet. Reversing the upward drift in the wealth share is the critical issue. Failure to address this, and its link to the cost-of-living crisis, has already put the political elite into disrespect. Eventually, this may transform into a palpable anger that will demand new answers.

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There is always a lot of talk about the economy. The headline these days is the deepening cost of living crisis. A subscript is whether the Reserve Bank will put up interest rates or not. Then there are the unaffordable cost of housing and the rise of price gouging by retail monopolies. Sometimes we hear arguments about the budget deficit and productivity.

Few people really know a great deal about the big picture. This is how the economy works as a system of interdependent parts. If we consider Australia, for example, we live in an economy that is broadly defined as capitalist. There is no argument about this. But it’s not quite the textbook definition. Of lots of little producers and many customers operating to put resources together to maximise profit and consumption. Between these owners and those they employ to do the work. There is the role of government and interdependence across the whole of society. This is an environment that tells us an economy is complicated.

The positive side is that in certain circumstances, this priority has proved to by dynamic. It can lead to a great deal of innovation and economic growth.

Even so, the operation of a capitalist can be loosely defined this way. As an economy where the accumulation of profit for the investor is the priority. Everything else comes second. Everything else is sacrificed for this end. If we look about us, it’s obvious that priority is being applied even more thoroughly than at other times.

Why is this? The answer is because the capitalist economic system in place in Australia is not working so well anymore. This is no secret. Much of it functions on bubbles and debt not directly tied to creating the goods and services society needs. The engine is shifting money around. The priority of increasing profit for the investor depends on one thing. A combination of pushing down of wages, raiding public assets, creating more debt, and using monopoly power to manipulate prices.

For as long as an Australian government persists in honouring this priority, it neglects other needs. An explanation begins with defining what an economy is in its most basic terms. An economy exists when two or more individuals cooperate. They do this to use what nature provides to meet their shared and individual needs. All economic systems are based on this fundamental. In other words. There are the needs of society.

Prioritising profit for the investor comes with a serious drawback. The needs of society ate neglected. This is especially true when the economy is not going so well. It is this that explains why governments have downgraded these other needs of society. They do this because they are firmly committed to the above-mentioned priority.

The question is whether this is necessary. If it is, there can be no alternative approach. To go on. If there is no other way in a stagnant economy, and only one road ahead, and this isn’t good. Dependence on profit on circulation of money, depressed wages, public sector raiding, and manipulation prices, is counterproductive. It undermines the source of profit in the end, by further hampering its capacity to function.

Wrong policy is an outcome of the priority of individual interest over shared interest. This restricts the ability to work together, and immediate gain rules over what happens in the longer run.

The only substitute is a change in priorities. It the needs of society are put in the first place; the economy can shift towards servicing them. The economy can be returned into harmony with cooperating with what nature provides to meet shared and individual needs. Government policy will reflect this.

Such an approach does not necessarily have to deny the role of profit altogether. Its contribution to innovation and growth can be harnessed, in a manner that imposes restraints on its negative side. The best way of doing this is to compel the investor to pay attention to the shared needs of society. business decisions should be based on of both profit and meeting necessary social goals.

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Everyone is upset about how Coles and Woolworths jeep on bumping up prices. So they should be. After all, they control the bulk of the groceries retail market. What they do affects us all. When they used their monopoly power to rise prices far above what a competitive market would sustain, it has an unreasonable negative impact of the standard of living of the population.

News that the Australian Competition and Consumer Commission (ACCC) is investigating a particular trick allegedly practiced by these two giants, is welcome news for the broad Australian community.

In this instance, the using pretend discounts to trick customers.

“Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost-of-living pressures,” said the ACCC chair Gina Cass-Gottlieb.

Th graph below shows how in a real case involving Oreo biscuits the price started at $3.60. This was raised to $5 for two weeks and marked down to $4.80 in an advertised price drop campaign.

By practicing this across many products, the supermarkets can widen their profit margins considerably. more so when they hook the public in with their dishonest “Prices Dropped” or “Down Down” promotion campaigns.

The ACCC allegations involve 245 products. At Coles and 266 products at Woolworths. And these are companies that score multibillion dollar profits each year. A report on these allegations will be out is due course, and the ACCC is signalling it intends to seek a court order to comal the two supermarket chains to contribute to charity. This would be a very mild penalty indeed. Any organisation guilty of fleecing the public on this scale should be considered to be involved in large scale theft and penalised accordingly if found guilty.

This is not too tough. Everyday Australians are finding it harder to put food on the table and a roof over their and their family’s heads. The rising cost of living is real. Jobs are getting scarcer. The economy is in the doldrums. This is a time for the nation to pull together, in a way where we look after each other, share the load and the reward.

Corporations operating in the opposite direction, driven by greed to maximise the bottom line and feed major shareholders, deserve the ire of society and to be held to account. What they do causes harm.

Image from The Australian: Supermarket CEOs love a healthy bottom line, pretend concern for cost of living affecting as the money flows to the shareholders

In this light the ACCC’s latest move on Coles and Woolworths, although welcome, is rather mild. Good if it can bring some easing of this particularly bad practice. But the reality of price gouging involves more than this.

Back in May, the ACCC released a report saying that there is evidence of price gouging coming out of the research of the Queensland University of Technology (QUT). The 195-page report detailed everything form the impact of pricing, excessive profitability, the wages and conditions of its staff, food waste, company mergers and land banking. It found many questionable practices. The ACCC recommended giving courts the power to break up anti-competitive monopolies and imposing a mandatory food and grocery code of conduct.

Nothing has come out of it so far. Price gouging is perfectly legal in Australia. Will anything come out of the look into false discount practices. Probably not, if the track record is an indicator. Up till now the major parties have not been willing to outlaw these practices. New Zealand, Britian and the United States have more laws to combat monopoly abuses than Australia does, and this goes to show just how far Australia is lagging.

Attention is needed to counter misleading advertising, the manipulation of stock availability to push up prices, understaffing and underpaying that leads to lowering service standards to widen an already wide profit margin, and the underpayment for produce from farmers and other suppliers for the same end.

A report commissioned by the Australian Council of Trade Unions (ACTU) last year, measured price gouging across a arrange of industries. It was led by former head of the ACCC Professor Alan Fels. It found evidence of price mark-ups, including the use of the weather and war to inflate prices. Labour costs are often blamed for putting up prices, despite that in real terms wage increases are minimal and well below the price increases, plus the wages share of national income is on a downward trajectory, while the corporation’s’ share is on an upward one.

The supermarket monopolies must be regarded as entities existing within society and having a shared responsibility to society. When the citizens are doing it tough, the monopolies must share the burden of overcoming this. When they fail to take on the responsibility, justice demands that they must be made to.

Maybe we have reached a point where we need fewer inquiries and more action. Cloes and Woolworths may not be the only guilty ones. But paying attention to them is a good start.

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