Economist Chris Richardson wrote an article in FRANCE explaining how Treasurer Jim Chalmers can “pull a rabbit out of the budget hat” thanks to soaring commodity prices. However, this comes at the expense of workers, whose real incomes are collapsing:
The good news is for resource companies and the business community more broadly… The bad news is for central Australia…
Although many in the business world are well ahead of Treasury budget expectations – with revenues growing much faster than costs – workers have seen their costs exceed their income forecasts…
A handful of winners receive lots of extra cash, but there are far more losers than winners.
The charts below from last week’s national accounts highlight the absurdity.
The energy (gas and coal) cartel is making war profits, with mining profits now exceeding the profits of all other industries:
Due to these extreme mining profits (note the rise in 2016), profits have massively decoupled from the remuneration received by employees:
In turn, the share of national income going to profits has reached an all-time high, while the share going to workers is at a historic low:
To add further insult to injury, workers’ compensation has fallen sharply in real terms and has not kept pace with rising labor productivity:
So basically, Australian workers are shrinking due to low wage growth and high inflation, while the foreign-owned energy cartel gouges are ruthlessly making super profits.
The situation is so absurd that although Australia posted a record trade surplus and record terms of trade in the second quarter thanks to the LNG/coal boom, the country’s net primary income deficit widened further to reach a record level of $24.0 billion:
According to the ABS, the reason “the net primary income deficit has reached record levels” was because of “high dividend payments to non-residents as earnings remained strong on rising commodity prices”.
So the more Australian coal and gas we export, the richer foreign mining companies get and the poorer Australians get.
It is only in the overthrown country of Australia that export impoverishes its inhabitants.
The data above shows why Australia desperately needs mining super profits taxes and national gas reservations.
As a counterpoint, the Norwegian government will collect $137 billion from its oil industry this year through its well-designed profit tax. In turn, Norway’s Sovereign Wealth Fund will soar to $1.8 trillion – shared among just 5.3 million people.
Unfortunately for Australians, the Albanian government is filled with political cowards and would rather ally with the foreign-owned energy cartel than govern in the interests of Australians.
In doing so, he will rob himself of much-needed budget revenue and piss off Australians by raising their energy costs, reducing their real disposable income and forcing the RBA to fight inflation harder by raising interest rates.