Committee for the Abolition of Illegitimate Debt

Around 18m Australians are eligible to vote and voting is compulsory (although the fine for not doing so is only A$20). In the last 2022 election, 11% of voters did not do so, reducing the turnout to its lowest level since compulsory voting was introduced. There are 150 seats up for winning in the all-important lower House of Representatives that decides the government. Voters have preferential votes (voting one and two preferences).

The current incumbent government is the Labor Party, which won a majority in 2022 under its leader Anthony Albanese. The opposition is a coalition of the Liberals (usually representing the richer parts of the cities and big business interests) and the National party (usually backed by the farmers and rural voters). It’s led by Peter Dutton. In 2022, Labor won 77 seats and had a two-seat majority over all other parties. The current opinion polls show Labor narrowly behind on first preference votes but ahead after second preference votes. It’s neck and neck but with a slight edge for Labor.

Albanese and the Labor Party have seen a significant drop in public support since assuming office. As Prime Minister, Albanese now holds a net approval rating of -5%, That’s because the last three years have been a rough time for average Australian households with COVID and the post-pandemic hike in the cost of living, rising interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. ; and extremely high house prices.

House prices in Australia overall have jumped 39% in the last five years – and wages have failed to keep up. It now takes the average prospective homeowner around 10 years to save the 20% deposit usually required to buy an average home, according to a 2024 State of the Housing System report. The rental market is no better, with rents increasing by 36% nationally since the onset of Covid – an equivalent rise of A$171 per week.

Labor and the Coalition have both promised to invest in building more homes – with Labor offering 1.2 million by 2029, and the Coalition vowing to unlock 500,000. These promises are just that – with a long time horizon. A 2025 State of the Land report by the Urban Development Institute of Australia says the federal government will fail to meet its target by 2029 – falling short by almost 400,000. The Coalition aims its housing policy as part of an attack on immigration – wanting to reduce the number of international students and implementing a two-year ban on foreign investment in existing properties. (But foreign buying of homes is just 1%).

Australia’s real wages are 4.8% lower than pre-pandemic levels, while across the OECD OECD
Organisation for Economic Co-operation and Development OECD: the Organisation for Economic Co-operation and Development, created in 1960. It includes the major industrialized countries and has 34 members as of January 2016.

http://www.oecd.org/about/membersandpartners/ real wages over the same period have, on average, risen 1.5%.

Real wages, as measured by annual growth in WPI relative to the annual growth in CPI, did rise by 0.8 per cent in the year to the December quarter 2024. But they are forecast to grow by just ½ per cent in 2024–25 and ¼ per cent in 2025–26.

Climate change in Australia has been a critical issue since the beginning of the 21^st century. Australia is becoming hotter and will experience more extreme heat and longer fire seasons.

As a result, the country is facing an “insurability crisis” with one in 25 homes on track to be effectively uninsurable by 2030, according to a Climate Council report. Another one in 11 are at risk of being underinsured.

Yet the economy depends very much on its fossil fuel exports and developing the mining industry. Non-renewable fossil fuels still account for about 85 percent of Australia‘s electricity generation. Australia is one of the world’s largest per capita emitters –producing some 1.3 percent of global carbon emissions with only 0.3 of the world’s population. For a nation so exposed to climate change, Australia remains one of the world’s biggest emitters per head of population. The Labor government has promised to reduce emissions by 43% by 2030- but that’s below the 50% recommended by the Intergovernmental Panel on Climate Change.

Australia used to be called the ‘lucky country’ where people could emigrate to and start a new and prosperous life in an economy that had not suffered a recession of any note for decades. But the signs that this was changing have been there since the Great Recession of 2008-9 and the subsequent Long Depression that ensued up to the COVID pandemic slump in 2020. Australian capital has been running out of more labour, especially as immigration restrictions have stopped net immigration expanding. Net overseas migration (NOM) has continued to decline from its peak in 2022–23, which largely reflects lower migrant arrivals. NOM is forecast to ease further with arrivals expected to continue to decline in 2024–25 before stabilising in 2025‍–‍26. The pool of working-age people has barely grown at all.

After taking into account population growth, average annual real GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. per person grew by about 2% a year in Australia up to the Great Recession. However, since then, per capita growth has averaged less than half that rate.

Source: IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org , author

Increasingly, Australian capital must rely on boosting productivity growth to expand, but productivity growth has been in a downward trend.

Source: ABS ABS
Asset backed security A generic term designating a security issued by an intermediate entity (SPV) between a transferor and investors in the context of a securitization operation. This security is a bond. When the assets backing these securities (called underlying assets) are made up of mortgage loans like subprime loans, they are called Mortgage Backed Securities (MBS). MBS are subdivided into Residential Mortgage Backed Securities (RMBS), backed by mortgage loans made to private individuals and Commercial Mortgage Backed Securities (CMBS). The term Collateralized Debt Obligations (CDOs) is used when the underlying assets are bonds issued by companies or banks, and Collateralized Loan Obligations (CLOs) when these assets are bank loans. productivity measure

As elsewhere, the slowdown in productivity growth can be connected to the slowdown in productive investment growth. Business has stagnated at best since the end of the commodities Commodities The goods exchanged on the commodities market, traditionally raw materials such as metals and fuels, and cereals. boom in 2011.

Source: ABS

What lies behind the slowdown in real GDP and investment growth? It’s the same cause that applies to all the major capitalist economies in the last two decades: falling profitability of capital. The great boom and revival of profitability in Australian capital from the 1980s, led by Australia’s exploitation of resources in minerals, agricultural products and energy, and the huge expansion of a skilled workforce with ‘liberalised’ labour markets, started to falter in the late 1990s. Although there was a short uptick in profitability during the commodity boom up to 2010, driven by demand from China for Australia’s commodities, in the last decade, the decline in profitability resumed.

Source: EWPT, author

Indeed, corporate profits have been falling in the last two years.

Australia is part of the imperialist bloc of countries, if a junior partner. Up to now, it has been a satellite of US imperialism in the Asia-Pacific region, but Trump’s tantrums are causing Australia’s ruling elite headaches. Nevertheless, both Labor and the Coalition are pledged to boost arms spending under the Aukus security pact with the US and UK designed to resist the ‘threat’ of China – or to be more exact to follow the strategy of US imperialism to ‘contain’ and stop China becoming a rising economic power in the region and globally, The government plans to invest up to A$18bn (US$12bn) to strengthen “manufacturing of missiles, including making advanced guided missile systems in the country.”

The irony in the sabre-rattling against China is that Australia had been ‘lucky’ because of its close proximity to China, the fastest growing economy over the last 25 years. Australia remains heavily dependent on its exports to China and world growth in general. But Trump’s trade war with China threatens to weaken Chinese demand for Australian exports of iron, coal and other resources. In 2023, China purchased 84 per cent of Australia’s US$85.4 billion iron ore exports. Iron ore accounted for 23 per cent of Australia’s total exports in 2023. Finding alternative buyers would be difficult — China purchased 69 per cent of global iron ore exports in the same year.

Australia’s third largest export is petroleum gas, with a 13 per cent share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. of its export mix. China, the largest importer of petroleum gas in the world, accounts for just under a third of these exports. China is a big importer of Australian services as well as goods. In the 2024 financial year, China was the largest importer of Australian education services, with a 24 per cent share.

Australia’s trade surplus with China accounted for 4 per cent of its GDP in the 2024 financial year. The growth in the trade surplus with China also accounted for 10 per cent of the growth in GDP — measured in current prices — from 2023–24. If the trade surplus with China were to shrink or even just fail to grow, it would have a significant impact on Australia’s economy.

Trump’s tariffs on Australia’s exports to the US will also hit the economy. The direct impact from Australia’s bilateral trade with the United States is expected, in aggregate, to be limited, given the US accounted for only 4.6 per cent of Australia’s goods exports in 2024. But Australia’s external account has already slipped back into its usual deficit.

The IMF is now forecasting just 1.6% real GDP growth this year, well below previous trend growth rates.

It’s true that inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. has fallen back and the Reserve Bank of Australia finally cut interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. rates for the first time in four long years. Even so, voters are still suffering from the losses in their living standards in those years and with little prospect of much improvement ahead. Whichever party wins will face serious challenges in increasing national output, living standards and in protecting the environment. And Australia is trapped between supporting US imperialism in its war with China and trying to sustain its markets in China and east Asia.