Class Antagonism and Landed Property in the Functional Distribution of Income in Australia

By Collins, Joe | Journal of Australian Political Economy, Winter 2018 | Go to article overview

Class Antagonism and Landed Property in the Functional Distribution of Income in Australia


Collins, Joe, Journal of Australian Political Economy


The ratio of labour to capital share of GDP in Australia could be considered a crude indicator of the state of class struggle. Questions around who gets what beget enquiries into how exactly that process unfolds. However such queries are framed, the tension between conflictual social groups is palpable. Discerning the causes and consequences of the declining labour share of GDP presupposes some comprehension of why the capital share has increased. The following remarks attempt to integrate a third 'factor of production', land, into this societal milieu. The discussion proceeds in four parts: an introductory section arguing for broadening the scope of enquiry around the declining labour share of income; a brief historical survey of the development of rent theory emphasising the need to reintegrate a theory of landed property; an outline of some key issues to do with extractive industry, housing, landed property and the declining labour share; then, concluding remarks reiterating the need to consider landed property in explanations for declining labour share of national income and some suggestions for how this argument could be substantiated in further studies.

The causes and consequences of the declining labour share of GDP have received widespread attention recently in media commentary and scholarly discourse. Consider the latest themes dominating media headlines in Australia. First, we have the attempt of the Australian Labor Party to deny self-managed retirees the right to claim cash refunds for excess dividend imputation credits (Benson, Brown & Kelly 2018). This policy initiative drew the ire of conservative commentators who labelled the move a part of 'Shorten's class-war' (ibid.).

Next, we have the claim from the Oxford Institute for Energy Studies that Australia is missing out on $90 billion in revenue from its natural gas exports because the 'Turnbull government has given up on collecting a meaningful amount of revenue from some of its most valuable resources' (Bagshaw 2018). According to this study, Australia will net $600 million from natural gas exports in 2018 whereas Qatar, with comparable endowments of natural gas, is set to capture $26.6 billion in resource revenues in the same year. The study recommends Australia adopt measures deployed by European countries, citing the current effective tax ratio of 21% in Australia in contrast to the 35% or more taken by the North Sea countries of Germany, Denmark, the Netherlands and Norway (ibid.).

Meanwhile, wage growth and the share of GDP accruing to workers in Australia are at historic lows. Australian Bureau of Statistics data reveal that in March 2017, labour compensation as a share of GDP had sunk to its lowest level since the ABS began collecting the data in 1959 (Stanford 2017). Stanford's contribution to this special edition of JAPE lays bare the inadequacies of much of the extant scholarship explaining why the labour share has declined so spectacularly. Most accounts are premised on functionalist views of the economy and therefore omit, on the basis of blinkered methodology, the point that factor shares of GDP are primarily determined through class struggle constituted by the ability to make demands of employers through organised worker action. The HawkeKeating Labor Accords undermined the structural capacity of workers to promote wage growth and the declining factor share accruing to labour chronicles this deterioration of working class power.

From 1974-77 to 2014-17 the factor share accruing to labour declined by 8 percentage points, representing a redistribution away from labour of aggregate output of around $150 billion per year. One particular component of this shift in factor shares bears further examination: the gross operating surplus generated on owner-occupied dwellings, which registered an increase of 3 percentage points over this period. The role and character of landed property in Australia is examined in service of this aim. …

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