The Reserve Bank of Australia provided some relief for home owners recently by keeping interest rates stable – the end of a long series of interest rate hikes that have taken rates to a 12-year high.
The Bank states that Australia has started to feel the pinch of an international economic slowdown. Additionally they predict 100,000 job losses in the next 12 months!
Retail sales have fallen for the second quarter, marking the first consecutive decline since 1996. The Socialist Party explained last month that the mining boom would not be enough to protect the rest of the economy from the effects of an international slowdown.
So now we have the threat of economic stagnation side-by-side with inflation. The Sydney Morning Herald pointed out: “Inflation will hit 5 per cent by the end of the year, but economic growth will slow to 2 per cent, the worst growth performance since the economy was coming out of recession in the early 1990s, according to the Reserve Bank.” This is a return to the ‘stagflation’ of the 1970s.
The slowdown will lead to more calls from bosses and rightwing politicians for workers to tighten their belts. The boom of the past years left many behind, and those that did move a bit ahead did so through getting into debt and working long, long hours. Now the situation for workers will get worse.
The warnings from the Reserve Bank led to bosses welcoming the glacially-slow speed of the Rudd government’s (partial) reversal of WorkChoices. They claim any relief for workers will affect their profits at a time of slowdown. For the same reason they support the government’s maintenance of the police state-style Australian Building Construction Commission.
The boom of the past few years is about to finish. This was the best capitalism could offer workers, young people and pensioners. Now the gloves are coming off and we can expect higher prices, fewer jobs, and even more attacks on our rights.
There is plenty of mineral wealth, agricultural produce, and industrial production in Australia to feed, cloth and house everyone and massively boost public health, education and transport. What’s stopping this happening is the lack of an economic plan to put it all together. Currently market mechanisms are used to determine manufacturing and employment. The boom and slump nature of the market has contributed to this current crisis.
The impending slowdown highlights the need for democratic socialism. Get involved with SP to put these ideas on the political agenda.
By Stephen Jolly