ArticleIs it merely ironic or a clever marketing ploy to have Anti-poverty week coincide with AGM season where we all get to gasp at the astronomical salaries of the country’s top executives? At this time each year as shareholders receive their annual company reports the media loves to remind us that whatever the top bankers, retailers and mining executives do, their efforts are deemed to be worth hundreds of times the average worker.
Meanwhile those engaged in publicising Anti-poverty week highlight a raft of reports on the cause and impact of poverty in this country and around the world. This year it seems there’s plenty of bad news to go around.
A detailed report on the cost of living by the St Vincent de Paul Society and the Victorian Council of Social Services (VCSS) suggests that for those struggling at the lower end of the financial ladder things are tough and getting tougher. Cath smith from VCSS says that at the same time that those with a financial buffer have enjoyed cheaper travel, holidays, computer and AV equipment, the cost of essentials in recent years have gone up. Low wage workers, pensioners and those on benefits have had to stretch what money they do have over rising costs of utilities, housing rental and basic food supplies like breads, cereals, fruit and vegetables.
Anglicare’s 2011 ‘State of Sydney’ Report laments the rising trend in homelessness and the particular vulnerability of women that this entails. Women make up two thirds of those seeking the support of specialist homelessness services, and they bring children with them. In 2009/10, 84000 children accompanied a parent or guardian when accessing a homelessness service.
Many of the women involved are fleeing domestic violence, but there are also issues around inadequacy of public housing, and the general lack of affordable housing for those on low incomes. The Anglicare report tells us that of 10,000 properties available in one weekend for private rent in Sydney and the Illawarra, “only 123 properties were genuinely affordable for low income households.”
The other big increases above the average have been in things like transport, health, education, insurance, beer and tobacco. Federal Government allowances haven’t kept pace with these increases, nor have concessions and rebates from the States. So we all know whom they will hurt the most.
Admittedly the causes of poverty are complex but a mere juxtaposition of executive salaries with those struggling to afford a roof and some bread reveals that something is amiss. This year top bankers’ salaries sit at around the $8 – 10 million mark with execs from mining companies and developers edging past them into double figures of millions. Telstra announced a 50% increase in their CEO’s salary while the Coles chief executive pocketed $15.63 million, part of a trend of CEOs earning 131% more than they did ten years ago.
Revelations of these salaries always produce a hue and cry in the media and among politicians. As predictable are those defending the payouts by claiming that the market demands that the best talent be rewarded, in order to ensure the well being of the company.
Given events of recent years, one might wonder about such faith in the unfettered market. But putting that to one side, even this argument won’t stand up to scrutiny in today’s climate. Sydney Morning Herald business editor Michael West writes, “once again this year, executive pay is rising strongly while share prices are down and returns to shareholders falling. If capitalism were functioning efficiently, executive pay would fall when returns to shareholders decline; pay would match performance, risk would match rewards. Yet they don’t.”
Workers struggle to get a 3% increase to match CPI. The average super fund return over the decade is a little over 3% as well, yet executive annual salaries continue to climb into territory that most of us would have to work a lifetime to equal.
since the recession the wealthy have become wealthier, those in the middle bracket are slightly less well off, while the poor are much worse off than they were three years ago
We are accustomed to the third world exhibiting huge inequality of wealth distribution, but signs are there that the West could be leaning in a similar direction. Danny Dorling, Professor of Human Geography at The University of Sheffield recently told Four Corners’ Kerry O’Brien that in Britain since the recession the wealthy have become wealthier, those in the middle bracket are slightly less well off, while the poor are much worse off than they were three years ago.
Dorling argues that the richest one percent of people is taking around one fifth of all income—a similar figure to that of 1920. Whatever trickle down has existed in the past it is fast drying up. “What you need to have a much lower rate of poverty [is] a much more narrow income distribution, so fewer people are being payed enormous salaries and fewer people are being payed tiny salaries,” he says. Presumably Dorling won’t be invited onto the board of BHP any time soon.
But it’s not only academics and journos who see problems with the current system, nor are executive salaries the only issue. Warren Buffett argues that he pays a relatively lower rate of tax than his secretary, and that the rich ought to pay more. In Australia statistics reveal that the wealthier you are the less generous you’ll be in giving money away. Philanthropist Dick Smith threatens to ‘out’ those he calls the selfish rich who refuse to give back to the community through philanthropy and charitable giving. Meanwhile others will suggest that what’s required for the poorest among us is some tough love to get them with the program and energised in a direction to create wealth for themselves.
Where might we find wisdom with which to negotiate this rocky path? Modern economies are infinitely more complex than those of the ancient world, and yet the principles of, for instance, the ancient Israelites’ Year of Jubilee are worthy of consideration. The modern mind might recoil from some aspects of the Old Testament, but at its heart was a concern for justice and care for the poor.
Under the instruction of Leviticus 25, Jubilee was to come along every 50 years and involved a proclamation of liberty to those who had been enslaved for debt and a restoration of land to families who had been down on their luck and forced to sell the family farm. The whole point of this system was to protect a widespread and equitable distribution of land and to prevent the accumulation of ownership in the hands of a wealthy few.
Broadly speaking, what was in view was a limit to the tendency towards wealth accumulation among the elite, with the accompanying inevitable oppression and alienation of those on the margins.
A key aspect of this principle that was repeated in other provisions among this ancient people was a strong sense of obligation to the poor and the belief that this mattered to God. Leviticus 19:10 declares, “Do not go over your vineyard a second time or pick up the grapes that have fallen. Leave them for the poor and the alien. I am the LORD your God.” Similar instructions are offered to those harvesting crops. “When you reap the harvest of your land, do not reap to the very edges of your field or gather the gleanings of your harvest. Leave them for the poor and the alien..”
If the health of a nation can be gauged by its attitude to wealth distribution and how it treats its most vulnerable people, then like many others in the West, we might have some soul searching to do. There remain important debates to be had about how best to achieve a system that is fair and equitable. Be that as it may, AGM season, coupled as it is with Anti Poverty week is as good a time as any to have the discussion.
Simon Smart is a Director of the Centre for Public Christianity