US Capital Eyeing Rented Apartment Market

 Written by: Ned K. on 30 November 2024

 

(Above: Gladstone apartment block, South Melbourne  Photo: www.thegladstone.com.au)

On Thursday 28 November the federal Government's Housing Scheme and Build To Rent Scheme passed through the Senate with the last-minute support of The Greens. 

The two Bills became law in the same week that there were more media reports of examples of people having to live in over-crowded, unhygienic rented rooms within flats to avoid living on the streets. The room renting is called "hot bedding" which is sharing the same beds in over-crowded beds of up to 20 people per room and living rooms partitioned for more sleeping places. Sub-letting in large cities like Sydney is also common where there is no written lease, rent paid in cash, no return on bond deposits and no proof to fight evictions. In the same week, it was announced that Perth had overtaken Sydney as the most expensive city to rent with one-bedroom flats being rented for $550 per week.

Prime Minister Albanese was visibly relieved to see the housing and rent related Bills become law. Will they solve the affordable housing and rental crisis in Australia? Not likely. The fundamental reason the Bills will not solve the crisis is that the schemes arising from the Bills obey the private for-profit engine of capitalism.

Build To Rent Scheme

In this article, let's take a look at the Build To Rent Scheme. In a second article to follow, we'll have a look at the Government's new Housing Scheme. 

The Build To Rent Scheme opens the gates for imperialist capital investment in the housing apartment sector. This follows its presence in Australia in the overseas student accommodation market and in commercial and industrial property markets. The Scheme is called a "tax reform" because big overseas capital investors in apartment blocks will get the with-holding tax rate of 30% reduced to the same 15% rate that applies for commercial and industrial property.

At the same time, foreign capital investors in building apartment blocks will get a capital works tax reduction increase from 2.5% to 4%. This allows expenses to be depreciated over a 25-year period rather than the current 40 years. The only restriction on the foreign capital investors is that tenants must be what is called long Term Rental which means a minimum of three years with the same tenant. 

There are no conditions placed on the rent price of the apartments, so the Scheme's "carrots" offered to foreign capital do not guarantee that the rents will be "affordable". 

An example of the foreign capital "interest" in the apartment rental market is Greystar, from Charleston in South Carolina in the USA. Described as an "American juggernaut" by Real Commercial, Greystar has already built its first "built to rent" apartment towers in Gladstone Street in South Melbourne and called the three-tower apartment block Gladstone which has 700 units in all. 

Greystar has real estate investments in apartments valued at $US315 billion.

Greystar boss Bob Faith wants to "team up" with pension funds and other sources of finance capital to build more apartment towers and attract middle-income earners to occupy them as long-term renters. Greystar is also planning to enter the overseas student accommodation sector in Australia through a takeover of Singapore based GIC.

The Albanese Government and previous governments are well known for being tied in so many ways to US  imperialism. Now the apartment rental sector in Australia can be added to the list!

Affordable housing for working people, retired people, students, unemployed will only be possible to its fullest extent when Australian economy is owned by the people and all sectors of the economy run for people's needs, not profits.

 

The housing problem in Australia: caused by capitalism and capitalist social relations (reprint)

 

(Above: Original photo courtesy of Fernando Goncalves)

Written by: Alex M. on 7 December 2023

Introduction: The housing crisis is not going away. It is a crisis in what Marxist historian Humphrey McQueen identifies as one of five pillars for the comfortable existence of the mass of the population. As such, it should be a social right and not an opportunity for private speculation and investment. 

A comrade has commended our article on housing in the latest (Spring 2023) Australian Communist, which can be downloaded from our website. He has suggested, in addition, that we reprint an article we published in June 2014.  That article in turn makes reference to, and quotes from, an article we published in 2010.

Over what is now more than a decade since the 2010 article, the housing problem has only worsened. 

Our comrade writes, “Even with a federal Labor Government and Labor Governments in most States and Territories, there still reliance on “the market” to control housing. Rents and house prices have increased even more and Governments at state and federal level rely on private “developers” who build suburban estates with no or little public services, or high-rise city apartment blocks which target the very wealthy or international students.”

Influential ABC financial analyst Alan Kohler has just had an essay titled THE GREAT DIVIDE: Australia's Housing Mess and How to Fix It published in the hard copy Quarterly magazine. A substantial extract can be accessed here, and is worth reading alongside our articles.

Our 2010, 2014 and 2023 analyses of Australian housing go beyond the suggestions forwarded by bourgeois economists on how to fix the housing crisis. That crisis cannot be fixed so long as capitalism is allowed to exist - eds.   

...................

The housing problem in Australia: caused by capitalism and capitalist social relations
Alex M.

A previous article on housing in Australia published in the ‘Marxism Today’ section of Vanguard in November 2010 referred to a report by the Australian Housing and Urban Research Institute (AHURI). 

The report examined the benefits and risks of home ownership for low to moderate income households. 

Fast forward to earlier this year and AHURI have made a submission to the Senate Economics Reference Committee, which has been given the task of investigating affordable housing in Australia. 

The Senate Committee took submissions from a number of interested parties, from individuals to organisations, amongst them AHURI. The Committee is due to report its findings to the Senate in late June.

What has triggered the inquiry into housing affordability is the inexorable rise in house prices and rents and the consequent rise in housing related poverty, people being priced out of homeownership and increasing numbers of the homeless.

What often gets overlooked in these sorts of Parliamentary inquiries are the main beneficiaries of house price inflation; landlords, real estate agents, property developers and financial corporations.

Inevitably, what is overlooked are the class aspects of the provision of housing in Australia. Nonetheless, it is possible to get important insights and information from such inquiries. 

Factors that have influenced housing affordability in Australia AHURI’s analysis

The AHURI submission identifies a number of conditions that are currently influencing housing affordability in Australia and are worth noting here. These are: 

• Insufficient supply of new housing to meet underlying demand. 

• Real house prices rising faster than incomes – estimates of the ratio of average/median house prices to average/median incomes vary between 5 and 7 depending upon which measures are used. 

• A preference for larger, higher quality dwellings, despite relatively small household sizes – from 1994 to 2009, the average size of a new house in Australia increased by 30% from 189 to 245 square metres, average household size fell throughout 20th century from 4.5 to 2.5 persons in 2006, yet the median price of housing in Australia rose 1994–2009 by 240% cent from $125 000 to $425 000.

• Falling rates of home ownership amongst 25-44 year olds. In 1981 61% of 25-34 year olds and 75% of 35-44 year olds were home owners. By 2011 these figures had fallen to 47% and 64% respectively.

• A change in the secure ‘tenure for life’ status of home ownership with 22% of Australian home ownership careers characterised by either dropping out permanently (9%) or churning in and out (13%) of home ownership.

• Market failure at the bottom end of the private rental market with supply unresponsive to demand, despite a context of growth in the relative size of the private rental market – in 2006 it was estimated there was an undersupply of 298,000 private rental properties affordable and available to households in the lowest 40% of the income distribution. By 2010, this is estimated to be over 500,000 dwellings. 

• Continuing high numbers of households in the private rental market in housing affordability stress – in 2007-08 60% of lowincome private renters were in housing affordability stress.

• A change in the nature of the private rental market from a predominantly short-term transitional tenure, to one that has 33% of its occupants (in 2007- 08) as long-term private renters who have rented for 10 years or more continuously, an increase from 25% in 1994. Long term private renters (597,000) now outnumber households in public housing (365,000). 

• The supply of dwellings in affordable housing programs (National Rental Affordability Scheme, community housing, public housing) is not keeping pace with population growth or the changing nature of Australia’s population (e.g. more older households and more households with people with disabilities). The share of affordable housing program dwellings in Australia has fallen from 5.5% in 1998 to 4.7% in 2012

• Growth in the numbers of people living in boarding and rooming houses and living in severely overcrowded dwellings from 46,991 in 2006 to 59,111 in 2011.

The AHURI submission to the enquiry is detailed (as are many other submissions) and does take a critical look at aspects of the taxation system such as negative gearing; the latter having contributed to the spike in house prices and rental increases. 

However, as the submission is to a Senate Committee, then it is reasonable to assume that the final recommendations will be for reform to address the inequalities inherent in the housing market here. Fundamental change and views that support that change will most likely be marginalised.

The problem of inequality 

Still, voices that highlight the inequalities inherent in the provision of housing under capitalist conditions in Australia persist, despite being marginalised. 
Frank Stillwell, Professor of Political Economy at the University of Sydney, made a short submission. 

His submission gets to the heart of the matter: “First we need to challenge the view, commonly conveyed in the media, that rapid housing price inflation is beneficial. The question should be: good for whom? There are losers as well as winners in a game such as this. Existing home owners and those owning rental properties may benefit in terms of capital appreciation. On the other hand, those who are seeking to become first homeowners must pay ever higher entry prices, making homeownership an increasingly unattainable goal for many households. Tenants meanwhile face escalating rents…”

Furthermore, inequality is an inherent part of the problem of housing affordability as well as being an intrinsic part of capitalism itself: 

“The contrast between wealthy suburbs and areas with poor housing is the physical expression of a deeply divided society. Of course, people’s capacity to service a mortgage or to pay market rent varies markedly according to their income. So it is very difficult to achieve the social goal of decent and affordable housing for all without addressing the economic forces that generate those inequalities. It is not just that some people derive income from capital while others only derive income from labour. Nor that some people benefit from inherited assets while others do not. These processes are compounded by the way in which housing inequalities interact with labour and capital market inequalities to create cumulative patterns of social advantage and disadvantage.”

Stilwell’s submission is critical of the role of what he calls the ‘economic forces’ which generate inequalities, in wealth and homeownership for example. 

He avoids using terms such as class and capitalism, due most probably to the audience he is addressing. 

We don’t need to be quite so circumspect. The housing problem in Australia is a product of the profit maximising drive of capitalism. Particular class interests benefit from the way things are in the housing sector now. 

What is also apparent is the decline of direct government involvement in the provision of housing at the Federal and State levels. 

The November 2010 ‘Marxism Today’ article on housing gave an overview of housing policy in Australia since the 1950s and the class aspects of housing and these sections from that article are worth repeating here.

Overview of housing policy in Australia 

In the 1950s, in line with postwar reconstruction in general, home ownership was promoted. 

A combination of housing and non-housing policies encouraged this ideal. 

These policies included: ‘exemption from capital gains tax, discounted/ controlled interest rates for home mortgages, cash grants to first home buyers, provision of low interest home loans directly by governments and via intermediary organisations such as state banks, sales of public housing to sitting tenants, mortgage deductibility (for a short period only), development of “affordable” home ownership lots by state land developers, and planning policies which promoted detached housing, the house type desired by purchasers’.

It was clear that governments at Federal and State levels saw it as their duty to help people achieve the ‘Australian dream’. 

With modifications, the broad policy settings of Australian governments continued along the lines mapped out in the 1950s. 

With the stagnation that accompanied the ending of the long boom of capitalism in the late 1970s-early 1980s, government policies regarding housing were re-assessed. 

The 1990s ushered in ‘a fundamental change in policy settings on home ownership with the elimination of some of the more explicit measures to promote home ownership.

In particular, governments no longer saw it as their role to assist the “marginal would-be home owner” in purchasing a home’. 

Emphasis in government housing policies shifted from the promotion of home ownership for ‘marginal’ people to the provision of rental housing assistance for those with urgent housing needs. 

Such a shift in emphasis was driven by neo-liberal ideology which saw the market as the most efficient resource allocator, with governments having the reduced role of safety net providers ‘for some “at risk” households’.

The class aspect of housing 

Clear from what has been outlined above about declining government involvement in and concern with housing policy is the power of particular class interests. 

Finance capital in the form of banks, home loan brokers and others have big stakes in the housing market and some rental investors do too, though the latter do not necessarily have the same clout as the finance capitalists.

As has been pointed out before in the pages of Vanguard, the provision of housing and related government policies necessarily reflect the values of the dominant class. 

That is, the provision of affordable housing to low and middle income families, or working class families, is not a priority for governments, landlords or fi nance capitalists. 

For the latter two, their priorities are profit maximisation. For governments, beholden as they are here in Australia to capitalist class interests, the social reforms of the 1950s and the long boom years are things of the past. 

Markets are alleged to be the most efficient mechanisms for distributing commodities such as houses. 
In his work The Housing Question, Frederick Engels wrote rather presciently about the attitude of capitalist states to the issue of working class access to affordable housing. 

“It is perfectly clear that the existing state is neither able nor willing to do anything to remedy the housing difficulty. The state is nothing but the organised collective power of the possessing classes, the landowners and the individual capitalists (and it is here only a question of these because in this matter the landowner who is also concerned acts primarily as a capitalist)… “

“If therefore the individual capitalists deplore the housing shortage, but can hardly be persuaded even superficially to palliate its most terrifying consequences, then the collective capitalist, the state, will not do much more.” 
Housing in Australia will continue to be fraught with problems of affordability for working class families, and fi nance capitalists and landlords will continue to rake in the profits. 

This is the stuff of capitalist social relations. The only solution to such inequity and inequality is the creation of a more just and equitable society, that is, an independent, socialist Australia.

Vanguard June 2014

 

One month after the NSW Election: what’s new?

(Above: Minns and Albanese savour the glory, but will rental crisis remain the story?  Photo: ABC News by Harriet Tatham)

 Written by: Ali K. on 26 April 2023

On the 5th of April 2023, Labor's full ministry was sworn in to the state government following their election victory. Chris Minns was announced as the Premier of New South Wales, ending 12 continuous years of Liberal governance in the most populous state in Australia. For many, this was a clear win in the struggle against privatisation, higher costs of living and scant public housing: housing advocacy organisation Shelter NSW came out to suggest that the new state government represented “a fresh start” as well as “the opportunity for fresh eyes”.

The Tenants Union cautiously welcomed the incoming Minns government, suggesting that the Labor government would be willing to address the crisis of rental affordability with a rental commissioner leading the ban on rental bidding. This practice involves real estate agents asking renters to bid higher than how much properties are listed for on the market.  

There is a kernel of truth to all of these claims: NSW Labor ran on a platform against the privatisation of Sydney Water, scrapping the public sector wages cap and investing in key sectors including transport, healthcare and education. But really how much does the Labor platform on housing offer renters, youth, pensioners and other groupings affected by the current housing crisis? 

Labor on Housing  

The NSW Labor website suggests that the Rental Commissioner (a proposed advisory body) would be an “advocate and a voice” for renters by working closely with the government to lead consultation on reasons for eviction, oversee a ban on secret rent bidding and identify barriers to increasing housing supply among other things. Upon closer inspection it appears that only two of the nine proposals are concrete action to help renters: a ban on secret rent bidding and a portable bonds scheme, which allows renters to transfer their existing bond over to a new property. All seven other proposals require the Commissioner to “identify” issues and “gather” data. But a rental commissioner isn’t a particularly novel idea: The former premier Dominic Perrottet also outlawed rental auctions prior to his resignation.  

Their policies weighed up 

Another policy that Labor had listed in their Housing Plan was to introduce a 30% requirement for all homes built on surplus government land to be set aside for social housing as part of their Build-To-Rent program. Again however, this target was proposed long before by the Coalition, for urban renewal projects in Redfern, Central Station and Rozelle Bay. The only difference in this respect would be that Labor are making the target mandatory.   

What looks somewhat promising is the elimination of stamp duty for first-home buyers purchasing properties up to $800 000 and a concession rate for properties between $800 000 and $1m for their first property. Not withstanding the fact that the Liberal Government had also called to scrap the stamp duty, a quick look at average house prices in NSW shows a hefty price tag of $1.13m, well above the proposed stamp duty exemption threshold. While this may have been an issue that many young people looking to get into the property market would have voted on, it offers little solace with the prospect of rising inflation and subsequently increased house prices.  

What's missing?

Despite some conciliatory measures, there has been no action from Labor to cap rent hikes which is the real issue hitting struggling working-class families. Tenants Union chief Leo Ross noted that one rental increase in the North Shore involved a hike from $1000 to $1700 a week. This isn’t just a problem in NSW – a recent Guardian report suggested that Australian tenants were paying $2700 extra on rent on average over the past year with the national median rent averaging to around $570. Why is it that the federal government can spend $368 billion on nuclear submarines while renters are struggling to make ends meet? Why is it that rather than long-term solutions to these issues all we get is more bureaucracy and more integration of our issues with the state? The answer lies squarely in the structural crises that capitalism induces.  

Some Historical Context

The struggle over rent is something that Marx noted in his seminal text on political economy, Capital. In his investigation into the source of profit, Marx touches on the existence of landed property and rent. We can conceive of rent in this sense as a social relation between people over land: for the landowner as a means of accumulation and for the tenant as a source of shelter and social reproduction. Marx writes in his 1844 Manuscripts: 

The rent of land is established as a result of the struggle between tenant and landlord. We find that the hostile antagonism of interests, the struggle, the war is recognized throughout political economy as the basis of social organization. 

Landed property on the other hand, or the existence of private property over land, is therefore a consequence of the existence of property rights and the ability for private owners to have stakes in what should be commonly owned – things like land, natural resources and infrastructure. Just as the worker confronts the capitalist in the sphere of production, so does the tenant confront the landlord in the struggle over housing and land.  

We can see these concerns manifest in the struggle over housing in Australia today. A census last year revealed that over 2 million people rent just in NSW, with around 30% of the 9.8 million households were being rented. Even though rent bidding was banned, it has done little to stabilise soaring costs.  

The Solution

The struggle to be housed is decisively a class struggle. As always, its solution lies in the very conditions capitalism creates: the independent organisation of renters (who include in their ranks workers, students and the unemployed) against attacks on their common existences into unions and advocacy groups. Now more than ever after Labor’s election victory, existing organisations must push Labor to meet their demands and seek independence from the narrow opportunism of parliamentarist politics.

Cost of A Roof Over Your Head "Through The Roof"!

 Written by: Ned K. on 9 December 2021

If you are paying for a home, the cost is going "through the roof"!

The Real Estate Institute of Australia's housing affordability figures for the September quarter 2021 reveal that the average family now spend 36.2% of household income on loan repayments, the highest level since the 2008 global financial crisis of  capitalism.

In NSW the figure was even higher at 44.7%!

In the last 20 years ending June 2021, the average family income has increased by 112.8% . However the size of the average mortgage increased by 284.7% and the average home loan repayments increased by 179.4%.

Average renting of a home has also increased during the same period. Twenty years ago the average rental cost for a three bedroom place was 22% of total family income. Now it is 26% of a tenant's family income.

The last two years of Covid-19 related stand downs and job losses have made the situation even more precarious.

Paying off a house or keeping up with rent payments make it even more courageous for workers who make a decision to take strike action to increase their family income or prevent the boss from further reducing income by changing rosters or trying to cut penalty rates or reduce regular overtime and use below award sub contract labour to do additional hours.

The demand on governments to provide affordable housing for working people, students and the elderly never goes away under capitalism. With the coming federal election, the affordability of housing issue is likely to be front and centre of mind of many voters. Aspiring politicians seeking another term in parliament or seeking a first term ignore the housing question at their own peril.

Building homes on the shaky grounds of capitalism

Nick G.                         14 July 2019

The residential building sector is seeing record numbers of builders going bankrupt, leaving  home buyers and construction workers in dire straits.

The sector is particularly vulnerable to the boom and bust cycle of capitalism owing to the over-reliance of all parties on credit supplies via the big banks.

Profit-driven construction is blind to demand.  Over-supply of high-density apartments and suburban housing is the Achilles heel of the industry.

In SA, ten builders have gone bust since last November, leaving scores of houses unfinished and hundreds of tradespeople unpaid.  The situation is probably worse in the two states that have been at the forefront of mining booms – Queensland and WA.  More than 50 building companies have collapsed in Queensland since 2013.  Many subbies are still chasing companies for payment of wages and other expenses or entitlements. It is not unusual for a collapsed housing company to owe millions of dollars to creditors, many of whom are former employees.

When home building is on the decline, spokespersons for the capitalists in the industry, such as the Master Builders Associations and Property Councils around the country, call for assistance from state and federal governments.  Blind to social needs, they demand stimulus measures such as removing compulsory requirements for rainwater tanks in new dwellings, scrapping energy efficiency audits, and fast-tracking approvals for demolition of older housing in favour of newer high-density and multi-level apartments. Two days ago, the WA Chamber of Commerce and Industry called for reductions in payroll tax. States compete with each other to reduce costs for business even at the expense of reducing the revenue they need to pay for health, education and infrastructure.

Whilst union coverage is not particularly high in the residential housing sector, denial of right of entry to union organisers and other legislative restrictions on union activity make the policing of payments and health and safety requirements difficult to enact.

Meanwhile, land and housing remain out of the reach of millions of Australians, and rises in the rental markets exacerbate problems related to affordable housing.  Homelessness is a permanent feature of our nation’s urban and regional population centres.

Historically, the only countries to have made effective provision for low-cost or free housing have been socialist countries where the state has replaced privately-owned construction companies, has controlled and guaranteed the availability of credit to state construction agencies and planned housing provision to meet peoples’ needs. Today, the latter must include generous amounts of open space as well as environmentally sustainable building practices and construction outcomes.

We have a relatively small population in a resource-rich country.  If we took control of the economy out of the hands of imperialist corporations and other capitalists, we could place the provision of housing for all on the stable foundation of socialism.
 

Housing Bubble About To Burst?

Ned K. 

The issue of housing and household debt is prominent in the media at the moment. Warning signs of a crash in the housing industry are accompanied by some pretty staggering statistics and predictions. 

For example, in the Weekend Australian (6-7 April 2017) Adam Creighton wrote a piece titled "If The Housing Bubble Bursts, Our Entire Economy Will Crash"! 

He said that excluding resource exports, greater than 20% of Australia's economic growth in the last four years related to home building and there are 600,000 jobs in home building all up. Each new home built gives rise to consumption growth, provided the home is sold of course. Sold they are, but often to speculators or developers with investment in property at a three year high.
Foreign buyers make up over 20% of the housing sales in Victoria and NSW.

The housing market is highly concentrated with Sydney and Melbourne making up more than 50% of the market. Despite the continued demand for housing from working people who have to borrow heavily to purchase one, investment analysts such as Jonathon Tepper from UK says the bubble is about to burst with home approvals having peaked in early 2015 and still falling.

He asks, "Could Australian home values be a mirage?" with house prices in Sydney and Melbourne having risen 100% since 2008.

How have people been able to buy houses over this period when it is also no secret that wages and salaries as a percentage of GDP have declined?

Where does the money come from? From what the capitalist press is saying, it is largely due to people borrowing amounts of money for inflated house prices that they cannot afford, courtesy of the banks and other financial sharks.

Australian household debt is rising three times as fast as wages and has been doing so for nearly a decade and is now over 190% of GDP.

Most of Australians' wealth is tied up in housing directly and also through shares in the very banks to whom people are in debt!

One staggering figure from the Australian article is that 40% of the $1.65 trillion in mortgages outstanding is in interest alone!

In the 1980s, business loans made up more than 67% of loans from banks.

In 2016, business loans are less than 33% of the $2.67 trillion of outstanding loans.

Now the prices of housing in the dominant markets of Sydney and Melbourne are beyond most young working class homebuyers and those that do buy are taking ever higher risks of not being able to pay off their house payments. 

Job losses and reduction in family income through reduced working hours or irregularity of work add to the brewing problem. The loss of full time jobs over the last four years and growth in more precarious jobs with respect to hours of work is still the dominant trend, despite the last two months seeing the highest number of new full time jobs in over 25 years.

This latter statistical information from the ABS is a misleading because it includes full time casual work which is not guaranteed work even in a capitalist economics sense. The figures also include labour hire jobs created by companies and governments outsourcing work. These jobs register as new jobs as their employer (the labour hire company) records an increase in its workforce!

How Super Is Super?

This question was asked when the employer-paid superannuation scheme was brought in to awards in the late 1980s in lieu of a wage increase. 

Ever since its inception there has been a struggle between the industry run funds on behalf of workers and the big end of town who want to get their hands on the accumulated funds worth trillions of dollars now. 

The latest idea of young people being able to divert employer-paid superannuation payments in to an account to be used as a deposit on a new home is really a transfer of workers’ money to the financial institution issuing the loan for the purchase of the home. It is yet another transfer of wealth from the workers to finance capital, a desperate move to try and keep the capitalist system growing which is its modus operandi.

You would think that the housing industry and banks would support Sally McManus and the ACTU push to lift the minimum award wage towards 60% of the median wage. The minimum award wage is currently a historic low of 44% of the minimum wage. Some may support it, seeing that an increase in wages will entice more to keep an interest in buying a home. However other sections of the capitalist class including the Business Council of Australia are outraged at a $45 increase to the minimum weekly wage and think the increase should be less than 2%.

Whatever they do, it is unlikely the competing sections of the capitalist ruling class can prevent a crash in the housing market and the catastrophe for families immediately affected by it. 

Perhaps they know it, the same as Trump knows he cannot provide the thousands of blue collar jobs he promised to 'make America great again'. Perhaps that what is what the talk and growing practice of war is all about. 

Their last resort to breathe life in to a moribund system is to force the people on to a war footing.

Peoples' livelihoods are being crushed by capitalism's economic crisis

Max O.

Capitalist production has placed enormous pressure on ordinary peoples' lives to the extent that we are again seeing the immiseration of the working class. Corporations are ceaselessly escalating their exploitation of workers who are pressed to do more in less time.

But their wages and livelihoods don't reflect the increased demands made on them. In fact the phenomenon of the working poor, whose size is ever increasing, has become common place this century. More and more of the value, what Marxists call Surplus Value, they create goes to the boss class.

Life is a battle when it comes to work, housing, transport, health and education. These needs are fundamental pillars to our day to day existence. 

Trying to maintain these pillars of life has become a misery for workers who are increasingly sliding into poverty.

Australia' economic slump continues, boding disaster for workers

Capitalism's frequent economic crises come about due to its inbuilt tendency for the rate of profit to fall which causes a withholding of investment by investors who prefer to hoard their money.

This combined with over-production creates a disruption in the circuits of capital:

Stage 1. The capitalist's money purchases commodities, this first stage of circulation is shown as Money to Commodities or  M — C.

Stage 2. Capital goes through the process of production, resulting in commodities of increase value or P...C'

Stage 3. The capitalist goes back to the market and sells commodities for money; the final circulation stage or C — M.

Karl Marx's formula for the circuit of money-capital is: M — C ... P ... C' — M', the dots indicate that the process of circulation is interrupted, and C' and M' designate that C and M have increased by surplus-value.

Australia continues to suffer a damaging four-year slump in corporate investment. Expenditure by business on new machinery, equipment and buildings has slid 2.1 percent compared to the previous three months to February this year. This was a twofold contraction than was predicted by bourgeois economists and a fourth straight quarter decline since 2016.

  

•    New capital expenditure fell overall from about $42 billion a quarter in 2012 to $27 billion per quarter in 2016, a drop of 36 percent.

•    Mining investment nose-dived almost 60 percent since its high in 2012, and is projected to fall by another 27 percent in 2016-17; and there has been no rise in non-mining investment.

•    Australia's dependence on foreign investment looks ominous; annual foreign direct investment inflows halved, to less than $30 billion, between 2013 and 2015.

•    Roy Morgan polling surveys show unemployment and under-employment now affects more than 2.4 million workers, or nearly 18 percent of the workforce: 1.3 million are jobless and 1.1 million are under-employed.

•    Wages figures continue to show record low growth with average weekly earnings rising just 1.6 percent in 2016, just slightly above the consumer price index rise of 1.5 percent. Reserve Bank delusion of a higher wages growth to boost the economy hasn't come to pass. 

The economic slump drives the boss class to increase their exploitation of workers.

Work

Capital relentlessly seeks to discipline labour-time so that workers do the job as quickly and as cheaply as possible. The 9-5 work day is now a by-gone era. 

Smart technology has blurred the boundaries between work and home; now businesses can command their workers 24/7. A research commissioned by The Australia Institute (TAI) reported that more than half of all workers said that their employers insisted they work unpaid hours or work at home outside of normal hours. 

Australian workers delivered $128 billion in unpaid overtime annually and are cajoled by employers not to take their entitled annual leave, reported TAI.

Housing

Demographia early this year reported that Australian housing has become one of the most unaffordable in the world; soaring housing costs have priced millions of young workers out of the market. In an international survey of 51 assessed Australian housing markets, 33 were considered largely unaffordable.

Mortgage repayments often outstrip the wages of those who do purchase a house. Mobile apps are now available for people to use to bid for rental accommodation - an attempt to push up rental prices. 

Rental costs have also continued to climb, consuming about a third of the median household income - the median weekly rent for a Sydney apartment is over $500. Although 1.3 million households received welfare payments and the $130 fortnightly Commonwealth Rental Assistance supplement in 2016, they still suffer rental stress.

Transport

Household, Income and Labour Dynamics in Australia (HILDA) 2013 data reported that the average weekly commuting time for full time workers in Australia's largest cities increased by almost 20 per cent from 2002 to 2011, to five hours and 45 minutes a week.

In Brisbane public transport fare that cost $3.40 in 2008 had risen to $6.20 by 2012. Data shows that in the outer city suburbs, fares go up and incomes fall.

Health

Recent annual Medicare statistics revealed that half of those suffering from chronic health conditions skipped treatment because of the high costs on “out of pocket” expenses incurred by patients. The national average out-of-pocket expenses for Medicare services increased from $3.95 in 1984–85 to $54.60 in 2014–15.

The Liberal-National government attempted to slash health funding in its 2014–15 budget by around $1.8 billion over four years, and $57 billion over a decade. In effect Australia’s publicly-funded Medicare insurance scheme is a “two-tier” healthcare system - excellent for the rich, lousy for the poor.

Education

Governments had three objectives in implementing NAPLAN (National Assessment Program—Literacy and Numeracy) in schools. The first was to excuse education spending cuts and prepare the ground for future austerity measures; the second is to socially sort students into winners who go to university and losers who become low wage work fodder; third is to attack teachers’ working conditions and enforce retrograde teaching practices, such as “initiatives proven to boost student results.”

The Turnball government abandoned the scheduled “Gonski” school funding for 2017 and 2018. The Gonski funding model, introduced by the former Labor government, was to fund schools on a needs basis. After winning office the Liberal-National government abandoned much of the planned funding, amounting to around $4 billion.

Build the people's 5 pillars movement

Ordinary people are focussed on their immediate needs to survive from day to day. Therefore to combat capital's exploitive intensification of workers and its austerity budget cuts that target worker's social welfare, ways need to be found to coalesce unions, unemployed, homeless, community support groups etc. into a fighting movement. 

The common denominator for these groups are the 5 pillars of livelihood - work, housing, transport, health and education - to mobilize and campaign around, so as to challenge capital and show another way of operating society is possible.

Housing Costs Through the Roof as Finance Capital Prospers

Ned K.

A recently released study of cost of housing in cities across the globe by Demographic International concluded that after Hong Kong, Sydney was the most unaffordable city in the world with median house prices up to 12.2 times the average wage.

Melbourne was not far behind at number six, with house price to wage ratio of 9.5.

An article in the Australian Financial Review (18-29 January 2017) provided additional information with a table for cities and regions in Australia which listed the percentage of household income required to service an 80% mortgage (20% as deposit) and the percentage of household income to rent such houses. Below is a sample with the percentage of household income for renting in brackets:

Sydney            44.5% (28.9%)
Melbourne        37.9% (25.6%)
Brisbane          30.3% (25.4%)
Adelaide          33% (25.7%)
Perth              29.4% (22.2%)
Hobart            29.4% (27.4%)
Darwin            24.8% (22.2%)
National          36.8% (29%)

Sydney's median house price rose to more than $1.1. million in the December 2016 quarter.

The peak housing advisory organisation National Shelter spokesperson Adrian Pisarski said that private household debt levels were leading to large increases in homelessness and massive levels of vulnerability for low and moderate income families. He said that rents are a clearer indication of housing affordability but they continue to rise as well. In one capital city in the last 12 months only 8% of new houses purchased were purchased by owner occupiers. 

Even the federal government's own State of Australian Cities 2014-15 report identified a widening gap between the haves and the have nots regarding home ownership and affordability. The report also acknowledged that middle and low income families were increasingly being forced to buy or rent in outer suburbs and then spend a small fortune on fuel costs getting to and from work.
Meanwhile property developers continued to build skyscraper units and apartments in the CBDs of Australian cities to the point where many of them remain empty due to their unaffordability for the people who need housing the most.

The absentee owners still benefit though through the government's negative gearing and capital gains tax policies. The government argues that these policies increase the availability of housing available for rental purposes. Adrian Pisarski disagrees, saying that despite investment in the new inner city skyscrapers, 94% of investors invest in existing supply and that if lower rents are the government objective with current policy, the plan is failing miserably.

National Shelter estimated that $150 billion to $180 billion is needed to subsidise affordable housing in Australia for low and middle income earners in the next 10 to 15 years.

Is There Enough Money for Affordable Housing for All People?

The October -November 2010 edition of the Australian Communist contains an article "Finance Capital and The Australian Economy". It reveals that the big four lending banks (Commonwealth, Westpac, ANZ, National) controlled more than 75% of all bank assets and banks accounted for over 90% of all lending by financial institutions in Australia. Their combined profits then were about $35 billion. 

In addition to the high profits of the big four banks, the 2010 article also points out that deregulation of the financial system by successive governments from Hawke to the present day has seen huge profits by overseas owned merchant banks such as Fist City and Chase Manhattan go overseas. 

Just a small portion of this wealth would go a long way towards affordable housing for working people in Australia.

The problem is that under imperialism, investment and profits are decided by and for the benefit of the super-rich financiers and speculators of all sorts.

Affordable housing will only be achieved when the ruling class in Australia is the working class who constitute the overwhelming majority of the population. This will only be achieved through struggle of a scale not seen before in this country. 

The Experience of The Russian Workers Regarding Affordable Housing

In 2017, the one hundredth anniversary of the working class revolution in Russia, it is timely to recall what the Russian working class, as the ruling class, achieved after the 1917 revolution regarding housing affordability.

Between 1923 and 1931, 40 million square metres of living space (living room and bedrooms) were built in the Soviet Union. The number of towns in the Soviet Union between 1917 and 1951 increased from 765 to 1,451.

Between 1917 and 1938 in Leningrad, the average living area per person doubled and in Moscow it increased by 94% and in the Urals by 195%.

The cost of housing in the newly formed Soviet Union was affordable and social in nature. Lowest paid workers paid as little as 2% of their income on housing rent. The lowest paid Soviet worker received about 125 roubles per month. Rent was 2 to 3 roubles per month (see  www.lalkar.org/article/2536/housing-in-the-ussr)