July 15th 2000

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Articles from this issue:

Cover Story: Human Genome mapping milestone?

Editorial: Managing Australia’s interests in S.E. Asia

Canberra Observed: Defence: opportunity beckons for Howard Government

Families: The hollowing of the middle class continues

New South Wales: Follow Swedish model: drug forum told

Trade: Canberra capitulates without firing a salvo

Doctors suspended over 32 week abortion

Straws in the wind

Education: New Queensland syllabus attacked

Economics: UN to look at the Tobin Tax

Media: GST ads unchained media bias

Development: Amartya Sen: the return of humane economics

Comment: The politics of suicide

Law: Death penalty debate resurfaces in USA

United States: Rising tide leaves poor floundeirng

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Families: The hollowing of the middle class continues

by Patrick J. Byrne

News Weekly, July 15, 2000
In the wake of the rise of One Nation, the backlash against the Howard Government at the last election and the defeat of the Kennett Government in Victoria, The Australian newspaper recently devoted a week of feature articles to reporting on the distribution of income and wealth in Australia after 17 years of economic rationalism.

The “Advance Australian Where?” series may also have been a response to devastating figures published — but largely ignored by the media and major economic think tanks — by Bob Birrell and Virginia Rapson of the Centre for Population and Urban Research at Monash University in October 1998. They showed that almost one-third of 25-44 year old men were not in full-time work, with dramatic effects on their marriage rates, divorce rates and accompanying rise in female single parent families.

The recent study for The Australian was conducted by Ann Harding from the National Centre for Social and Economic Modelling (NATSEM), and it looked at changes in personal and family incomes from 1982 to 1996-97.

It found that there had been a hollowing out of the middle class. Middle income earners shrank from 45% to 35% of all wage earners. About half moved up into high income brackets and half moved down into lower income brackets.

This had a profound effect on families, as more and more married women moved into the paid workforce, despite repeated studies showing that about two-thirds preferred to be full-time homemakers.

Women took 60% of the 2.74 million jobs created over the 15 years. As a result, “traditional” families — single income coupled families — fell by 19.2%.

Among those remaining in the middle class, the traditional family fell by almost half, from 38% to 20% of all families.

The traditional family has been replaced by single parent families, double income families and the alarming proportion of families where neither parent has a job.

Families remaining in the middle class were said to have benefited from a small increase in their standard of living.

This rise was estimated from increases in family income, considering also welfare payments, taxation, inflation and importantly, size of family.

However, the claim that families in the shrunken middle class maintained their standard of living belies the social changes these families have undergone.

When families come under economic stress such as maintaining mortgage repayments, then typically the wife goes to work, children are postponed and the size of the planned family is reduced.

Ignoring these realities, many of The Australian’s commentators concluded from the NATSEM study that basically everybody in Australia was better off after 15 years of economic reform, and that, because the wealthy had gone ahead faster than middle and low income groups, class envy had created the recent political backlash.

Paul Kelly, The Australian’s International Editor, concluded that there had been a big increase in inequality but that this is relative. The top 10% of individuals increased by $200 per week in real terms, which is 3 to 6 times the gains made by the middle and bottom income groups. “So although on average everyone is better off, the gap between middle Australia and those at the top widens.”

The Australian’s correspondent George Megalogenis said: “... living standards have improved for many, yet they feel poorer. Globalisation has taught us to want more, but when we get it we’re not satisfied because we believe we’re entitled to more again.”

Alan Wood, The Australian’s Economics Editor, asked, “Why should we worry if more Australian’s become richer as long as they are not impoverishing other Australians and as long as we are looking after the genuinely needy?”

Prime Minister Howard admitted to social breakdown but did not attribute it to economic problems.

In contrast, academic and commentator Michael Pusey argued that “The chance of a family splitting up, the chance of being retrenched, the chance of you not being able to meet your mortgage repayments ... all of these things have increased by a multiple of three. You put all that together and you find family life is saturated with risk and the possibility of failure. There is not much margin for error and many families have simply run out of coping strategies.”

As the series concluded, The Australian Editorial conceded that the was a culture of anxiety and discontent building as a result of the economic changes our governments had introduced, but offered not one suggestion as to what could be done to resolve the problem.

Rather, Australians were urged to embrace the changes come what may and politicians were urged to go on doing what they have been doing for years, passively and sympathetically listening to the complaints.

With these economic problems unresolved, we can expect the backlash to intensify.

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