‘Don’t insult me’: Labor luminary unleashes over falling house prices, real wages

Bill Kelty, a mastermind of reforms that set up Australia’s modern economy, says Anthony Albanese and Jim Chalmers are fuelling One Nation and “insulting” voters by welcoming lower house prices as they preside over a fall in real wages that is making houses even more unaffordable.

The Labor luminary and former union leader made one of the sharpest and broadest critiques of the federal government’s economic record in an interview with this masthead on Thursday, declaring “this country has got real problems” as he predicted more pain to come due to expected interest rate rises.

Days after Westpac revealed first homebuyer loan applications were down 30 per cent since the May budget, compared with a 26 per cent fall among investors, Kelty said: “The PM is telling the country with glee that the price of property is falling, yet the unaffordability rate is increasing.”

“Because interest rates are rising and real wages are falling,” he said, with high inflation, long-term poor productivity, war and the AI boom making another rate rise at the end of this month likely .

“Real wages have fallen by 5 per cent [since 2021, according to the OECD]. Real wages are not improving in any significant way – they’re falling.”

Only New Zealand, Italy, the Czech Republic and Sweden experienced similar wage falls. Housing affordability slumped to its lowest level on record in the June quarter , according to two separate metrics, but the government hopes that the market correction and its property tax changes eventually lead to more affordable homes.

Kelty also slammed Chalmers for making the point as recently as last week that workers’ share of gross domestic product was at a high point, arguing the esoteric measure had no real-world effect.

“You had the treasurer say workers should be happy because their wage share is increasing, but their real wages are falling,” Kelty said. “It’s just ridiculous and people get offended by it. They can’t pay the bills, and you tell them your share of GDP is growing.

“Don’t insult me: that’s what they are saying. Build more housing and increase real wages, please.

“All you’re doing is saying to me, I’m battling in life, I’m a driver earning 80k a year, and I should be happy and say the share of GDP is going up.”

Kelty worked with Bob Hawke and Paul Keating in the 1980s and ’90s to bring workers and bosses together to create consensus on pro-market reforms that delivered a social dividend.

The reform period also led to the modern superannuation system, with Kelty now critical of One Nation’s proposal to use super to top up wages.

“It’s like Santa Claus stealing from the kids’ money box to buy them their Christmas presents,” he said, arguing that super was a national treasure that had taken pressure off the pension while other countries struggled with the cost of an ageing population.

Kelty, who is close to Albanese’s former leadership rival Bill Shorten and has criticised Labor previously , backed the government’s environmental planning reforms, Medicare investment, HECS cuts at the last election, and some of its industrial reforms.