The reality of Australia’s “two-speed” economy

[Hannah Bell]

The release of a new round of positive GDP figures in August was the cue for Australian Treasurer Wayne Swan, to announce that finance ministers in the US, Europe and Japan would “kill for figures like these”. The Australian economy grew by 1.2 percent in the June quarter, that is, at an annualised rate of nearly 5 percent...

Like a tree rotting from the inside, however, knock gently on the June GDP figures and you will hear a hollow sound. Numbers released simultaneously with the national accounts show that the mining industry, which accounts for just 7 percent of the economy, accounted for 40 percent of pre-tax profits in the June quarter. Excluding mining, pre-tax profits fell by 8 percent. New housing sales fell by 7 percent. Wholesaling profits fell 17.5 percent.

What this broader set of figures indicates is an economy with just a single area of growth—the extraction and export of coal and iron ore to Asia...What happens to these huge mining industry profits? Do they find their way from the coffers of Rio Tinto or BHP Billiton into the rest of the economy or even into the hands of workers?

In reality, other figures, especially income distribution indicators, tell a different story. Over the last 30 years the share of national income devoted to wages has been on a continuous decline, but the fall in the wage share over the past year, including in the last three months, has been among the sharpest on record. Just over 52 percent of national income is paid to workers. That trend mirrors the sharp fall in labour costs per unit of productivity—down 4 percent since the beginning of the global financial crisis alone. In other words, although Australian mining profits are going through the roof, workers’ share of those profits is in precipitous decline...

http://www.wsws.org/articles/2010/sep2010/econ-s14.shtml

[BlueJazz]

1. I'm going to Australia (for 2 weeks) in October. I'll talk to people and see..

...what the average Assie thinks..