Poor Little Rich City

Peter Boyle writes that Howard’s rule: 10 years too long. The longevity is attributed as:

It’s the economy, stupid, chorus the pundits. What do you expect after 15 consecutive years of economic growth?

...

A detailed study, carried out by the Australian Centre for Industrial Relations Research and Training, found that 60% of Australians feel that their lives are a lot less secure now compared to ten years ago. Greater job insecurity makes people more fearful of recession.

The two major contributors to economic growth over the last decade — the housing price boom and the mainly China-driven resources boom — have had an uneven impact on people’s lives.

First, the rich got richer.

The Howard government has presided over a massive transfer of income share from wages to corporate profits. Profit share of national income rose from 23% in 1996 to a record 26.2% in 2005. Further, between 1990 and 2005 the average annual regular cash earnings of company chief executives, who were also members of the Business Council of Australia, went from $514,000 to $3.4 million. Their incomes now outweigh the average full-time wage earner by a ratio of 63 to 1.

Homeowners might feel better off but mortgages are a bigger strain. For example, the number of Sydney households suffering “housing stress” — where more than one third of income goes on rent or mortgages — has jumped by more than 50% in the past decade. Repayments on first home loans swallow nearly 40% of average incomes.

The housing bubble has really enriched a few and made many others feel wealthier for a while, boosting their spending on credit. However, it has also frightened many into not rocking the boat. Coalition fear campaigns about the alleged danger of a return to higher interest rates under Labor bite hard in the mortgage belts.

Emphasis Mine

In the SMH, Sydney is portrayed as Poor little rich city, this theme is expanded upon. Those with assets have benefited both from their shares portfolio and properties.

The figures reveal how the economic fortunes of the city's people have ebbed and flowed in the past two decades and particularly in the past six years.

Despite the recent sluggish performance of the NSW economy, on the very broadest measure of living standards things are as good as they have ever been.

Income per head of population is at a record high. It has risen 12.4 per cent, adjusted for inflation, since the beginning of 2000, 2.1 per cent over 2005, and by almost half since March 1987.

The wealth of Sydneysiders has also soared. The median house price has risen more than 70 per cent and the value of the typical small share portfolio has gone up by almost 60 per cent in the past six years.

Shares are worth 2½ times what they were in 1987, and property prices are a staggering five times higher.

Emphasis Mine

The SMH report leaves out the effects of cutbacks in government services to the have-nots.

Here we have material interests determining political choices. Those with assets will vote for Howard because they see themselves as better off. Those without assets see no political alternative because the ALP tries to beat Howard at his own game. So Howard wins because he rewards his followers and there is no effective opposition (via the ALP).