Is It Fair For Australian Corporations To Make Record Profits During A Cost Of Living Crisis?
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The Australian economic landscape has seen a succession of Australian corporations declaring record profits. The big insurers were the latest, joining the banks, the supermarket duopoly, the airlines, and a host of miners and fossil fuel companies in achieving record profits. Is it fair for Australian corporations to make record profits during a cost of living crisis? Many ordinary citizens are struggling to afford to put food on the table and meet their rent or mortgage payments. High inflation in the local economy has been the given reason but analysis by pundits has revealed that many companies have been price gouging on the back of a lack of competition in the market. This means these companies can set the price and consumers are bereft of power in the equation.
“Australia’s life insurance industry doubled its profits to $1.2bn in the 12 months to 30 June 2023, KPMG’s annual market review reveals. The cost of premiums for individual-advised disability income life policies rose by 10-12 percent, consistent with recent years, as insurers tried to staunch losses and boost profitability.”
“Australian private health insurers earned $1.3bn more in surplus from hospital premiums this year compared with two years prior, while returning less money to customers, a new report suggests.”
- (Natasha May, 15 Dec 2023, The Guardian)
Profit Raking Australian Companies Price Gouging Amid High Inflation
What kind of country do we live in where it is OK for Australian businesses to profit from the pain of the community during an economic crisis? Rents have been spiralling up and up, which means landlords are doing the same to vulnerable tenants. Many of our elected members of parliament are landlords and derive substantial income from their property portfolios. Several enquiries into price gouging by Coles and Woolworths are underway, as governments and unions seek to understand the state of this massive duopoly and its effects upon the nation. Amid all this the Reserve Bank of Australia (RBA) has been steeply raising interest rates on the cash rate in a bid to slow the economy and halt the rise of inflation further. This has been achieved at the cost of much financial stress and the start of job losses throughout the nation.
RBA Offers No Scrutiny On Prices Rises By Australian Businesses
Consumers in Australia are the targets of RBA monetary policy and workers too it seems. There were no warnings from the central bank and its governor about price rises by corporations and businesses. No, warnings were directed at any wage increases and at the economic behaviour of consumers. The RBA is firmly on the side of business, as bankers always are in this economic paradigm. It is a strange state of affairs that those raising the prices, which is of course inflationary, do not come under any public scrutiny. The extreme concentration of market share in the hands of too few corporate entities would, one would think, make this lever a far more effective one to pull than the broad spectrum one of raising interest rates. Monetary policy hurts the poorest and those who can least afford it the most within our economy. Its very design is a socioeconomic political statement about where power resides and with whom.
“AGL’s underlying net profit after tax for the six months ended Dec. 31 was A$399 million ($260.11 million), compared with A$87 million a year earlier. According to Jefferies, the consensus estimate was A$311 million.”
Money Matters More Than People In Australia
The Australian community, after a decade of Coalition neoliberal economic policies, has become inured to a money matters most ethos. The LNP invariably put the business side of things first in any debate about what is most important. The divide between rich and poor has become ever wider on their watch. The user pays rentier economic model keeps taking more from those who can least afford it and redistributes that combined largesse to the super rich. Thus, extra big super profits for banks, insurers, miners, oligopolies, billionaires, and the big end of town. Meanwhile the working poor slide further into desperate straits. Rents are unaffordable in Australian cities and there is a dire shortage of rental stock. Governments stopped building social housing because neoliberal economic thinking told them that the market would take care of things. Well, it bloody didn’t! The rise of short term holiday lets further stripped properties from the long term rental market. Again this is about servicing wealthier Australians for their holiday accommodation at the expense of places for workers to live. Record immigration into Australia has just made the shortage of housing stock much worse.
Corporate Australia A Moral Waste Ground
Ordinary Australians are taking it in the neck and the wallet from the corporations doing business here. Domestically big business is feeding on the need for essentials like food, energy, and shelter costs. Record profits are being made across the board at our very real expense. Since the pandemic, we have sustained a barrage of economic wolves at our doors. Any government assistance from that time has been eaten up and then some by these companies who operate as if it is perfectly OK to raid the savings of the working poor for their record profits during a cost of living crisis. There is no moral high ground in the business world in Australia – it is rapacious and uncaring via its price gouging. You know what it says to me? It tells me that many in Corporate Australia are unscrupulous and very willing to take advantage of people when they are down. It is weak s*** from faceless folk putting the boot into needy Australians like the elderly and the poor. It should be called out for what it really is!
Allan Fels declared that Australian companies have been raising prices well above their own increased costs of doing business.
“The former head of Australia’s competition watchdog has urged the federal government to order an in-depth investigation into supermarket profit margins and supply chains, accusing the major chains of “overpricing”. “
How About A Conversation About What Is Right & Fair?
Shouldn’t we as a nation and a community be having a discussion about what kind of country we want to live in and how we do business? About whether price gouging during a cost of living crisis is acceptable corporate behaviour in Australia? Is it really necessary for business to have all the advantages in its corner and for we consumers to have none. Capitalism is supposed to be about a free market economy, but what big business does is remove that competition via mergers and takeovers. The ACCC has failed in Australia and that is because our governments have underfunded it and left it yet another toothless tiger incapable of policing the big end of town. Business has bought our politicians by campaign donations and purchased influence at our expense. Political parties are corrupted by these machinations in their fund raising activities. Where is the NACC? The great invisible new federal ICAC has been nowhere to be seen. Our political campaign funding safeguards are completely inadequate.
Australians Short Shrifted By Corporate Australia
We the people are getting short shrift from corporate Australia and our governments. The RBA does nothing but prop up the existing unfair status quo in economic terms. Australia has the greatest corporate concentration of market share in too few hands the world has seen. Our media is owned by Murdoch, Nine Fairfax, and Kerry Stokes. This is why we don’t see too many stories about certain things like corporate control and undue influence because they are in bed with their big advertisers. Unthinking Australians fail to see how they are constantly being manipulated by what they do and don’t see in their news. Pro-Israel news reporting is but one current example of this sway of corporate media and its doctoring of the news. Murdoch’s News Corp is the most blatantly right wing of the lot always beating a climate change denying, extreme conservative, and anti-progressive drum to its viewers. Murdoch mines the politics of grievance to rile up the dominant cohort of entitled white viewers on Sky News Australia and in his newspapers. Famously in America his Fox News is largely responsible for making the extreme polarization between left and right far worse. Profiting by stirring up contention and ill feeling. Fox News was successfully sued nearly a billion dollars for reporting libellous and untrue stuff about the 2020 presidential election in the US. Lies and distortions are the bread and butter of the right wing press around the globe.
Is it fair for Australian corporations to make record profits during a cost of living crisis? The simple answer is no. What are we as a country going to do about it. Will the apathetic Aussie stand up for her or his human rights? Will we demand our governments do more? These supermarket behemoths should be broken up, as should many of the oligopolies and duopolies operating in our economy. Prices must come down! People over profits! The smug Scott Morrison is gone and the Coalition are no longer in power. It is time to make some real changes to undo the economic advantages of the big end of town.
Robert Sudha Hamilton is the author of Money Matters: Navigating Credit, Debt, and Financial Freedom.
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