Australia’s two major supermarket chains charged for price-gouging with fake discounts

Taylor Bennington

The two major Australian supermarket chains, Coles and Woolworths, intentionally misled customers by placing “illusory” discounts on items that had been temporarily raised in price, according to the Australian Competition and Consumer Commission (ACCC). Separate court proceedings against both companies have been initiated by the ACCC, the country’s national regulatory body and an arm of the federal government.

Rising food prices in Australian supermarkets [Photo: Freepik.com]

This deceptive practice reportedly impacted the sale of tens of millions of products between September 2021 and May 2023 at Woolworths, and between March 2022 and May 2023 at Coles. It allowed the supermarkets to appear as if they were dropping prices when they were actually raising them, directly exacerbating costs for customers during an immense surge in the cost of living.

The ACCC is responsible for enforcing the Competition and Consumer Act 2010, supposedly designed to prevent anti-competitive practices, misleading advertising, price fixing and unfair practices toward consumers. 

In fact, it prevented nothing of the sort, nor did it initiate the investigation into supermarket price-gouging. It was angry working people who first noticed the false discount tags, eventually compelling the ACCC to initiate an investigation. 

The regulatory body amassed its evidence through hundreds of social media posts made by concerned working people on X (formally Twitter), Reddit and TikTok and via direct complaints from customers. As ACCC chair Gina Cass-Gottlieb admitted, “We first identified this conduct because of contact from consumers.”

The ACCC claims Coles and Woolworths artificially raised the prices of hundreds of everyday products by at least 15 per cent before offering misleading discounts. This manipulation occurred under “Down, Down” (Coles) and “Prices Dropped” (Woolworths) promotional campaigns where 266 Woolworths products and 245 Coles products like Tim Tams, Doritos, Bega cheese, and Libra tampons were “discounted” at different times.

For instance, Woolworths increased the price of an Oreo Family Pack that had been $3.50 for over 696 days to $5.00 for 22 days, then applied a “Prices Dropped” promotion with a new price of $4.50. By increasing the “was” price, the supermarkets were able to exploit their promotional campaign and pose as if they reduce prices in the consumers’ interest, when in fact they were increasing profit margins.

Many consumers are outraged by the rising supermarket prices. The ACCC found in a recent consumer survey that trust in “sale” prices is declining, and about 50 percent of consumers now compare prices between stores before shopping, up from 17 per cent in 2008. Furthermore, the two supermarket chains offer almost identical prices and “discounts” on common items, just at different times at their respective stores. 

Coles and Woolworths are blaming increases in supply chain costs for their increase in prices. However, a Four Corners documentary released by the Australian Broadcasting Corporation in February showed that the prices at the supermarkets did not increase in proportion to their operational costs but outstripped them, leading to higher profits. 

In the financial year of 2023-2024, Woolworths reported a net profit after tax of $1.71 billion. Coles reported a net profit of $1.1 billion, marking a 2.1 percent increase on the previous year.

Woolworths is the largest supermarket chain in Australia, running approximately 1,140 supermarket stores, while Coles runs approximately 840 stores. These two chains control over 67 percent of Australian supermarket retail sales. The third largest supermarket chain is German-owned ALDI, which has a market share of approximately 9 percent and nearly 600 stores, having arrived in 2001.

The blatant price-gouging targeting consumers forms part of a broader pattern, with the two chains exploiting their market dominance in other ways. Many grocery suppliers, for instance, informed the ACCC that they often receive prices lower than their production costs and are forced to accept unfavourable conditions.

The ACCC report also highlights industry accusations of “land banking,” where companies purchase land without immediate plans for development, using it as an investment and to block rival grocery companies. Woolworths was identified as owning 110 undeveloped sites across Australia and Coles 42 sites.

A 2008 inquiry by the ACCC into the supermarket sector found that Woolworths and Coles were able to buy up huge areas of land and prevent rival supermarkets from developing stores. A lack of viable supermarket locations led German supermarket conglomerate Kaufland to pull out of investment in Australia in 2020. 

The ACCC’s action over the price-gouging could result in financial penalties being imposed. They start at $50 million per violation or up to three times that amount, depending on the scale of violation. The ACCC is also seeking guarantees that Woolworths and Coles will “each fund a registered charity.”

That latter request underscores the generally toothless and pathetic character of the regulator’s action. The obvious question, which it has not attempted to answer, is how the chains were able to engage in these practices over an extended period without the regulator noticing prior to consumers taking to social media.

The answer is that the ACCC, and the entire regulatory framework, is part of a set-up designed to protect the profits of the major corporations, while occasionally issuing token criticisms or even initiating actions aimed at masking this basic reality.

The price gouging has a broader significance, expressing in a particular form the massive power of the major corporations and shedding light on the class character of the cost-of-living crisis.

The period when Coles and Woolworths were engaging in their phoney discounts included the peak of inflation, which reached a high of 7.8 percent in December 2022. 

The official inflation rate understates the impact on working people, with real cost increases to essentials, including supermarket prices, invariably higher. That remains the case today. While the Labor government has touted reductions in the headline rate, costs associated with housing are at record levels, as prices for other key items such as groceries surpass the overall figure.

This is part of a longer-term trend. The ACCC inquiry also revealed that over the past five years the cost of a standard grocery basket has increased by more than 20 percent and that low-income households are now spending more than 20 percent of their net income on groceries.

While major global shocks, including the COVID-19 pandemic and the US-NATO proxy war against Russia in Ukraine, have helped to fuel inflation over recent years, official discussion has almost invariably covered up the role of corporate profiteering.

One exception was provided by a study conducted by the Australia Institute in July 2022. It found that the increases in prices to that point during the current inflation crisis were 60 percent attributable to business profits.

The response of governments, including the Labor administration in Australia, has been to protect those profit-making activities. Meanwhile, the Reserve Bank has increased interest rates thirteen times and has maintained them at the high levels, inflicting further pain on mortgage holders and working people more generally. That is part of a broader onslaught on living conditions, which has seen a 4.8 percent decrease in real wages since 2019.

Labor has cynically postured over the activities of the supermarkets, including with condemnations of the price-gouging. Its primary measure, however, has been to make mandatory an already-existing code of conduct covering the supermarket chains, drafted in consultation with the conglomerates themselves.

When the opposition Liberals and Greens sought to capitalise on widespread anger earlier this year by suggesting divestiture powers if the major supermarkets continued to engage in predatory practices, Prime Minister Anthony Albanese accused them of wanting to “break up capitalism.”

Labor has aided and promoted Coles and Woolworths as the two companies have overseen a wave of job-cutting and automation in distribution centres and stores while increasing shareholder profit. As the WSWS has reported, Coles is in the midst of a major restructuring operation aimed at cutting costs, not to lower prices for customers, but to raise profitability. Hundreds of jobs have been cut in the past 5 years.

UK Labour government hikes student tuition fees, maintains Tory repayment threshold

Henry Lee

The UK Labour government’s increase to university tuition fees announced last week confirms the abandonment of all promises of “a fairer solution” to student funding.

The policy is an attack on students and graduates, who will be made to pay for the economic crisis through fee hikes, as well as the deterioration of wages and conditions faced by the whole working class once they enter the workplace.

On November 4, Secretary of State for Education Bridget Phillipson announced that the maximum tuition fee for universities in England would increase by 3.1 percent from the 2025-26 academic year, in line with the projected figure for RPI inflation, taking the fee for full-time undergraduates to £9,535. The government is reportedly planning annual increases to the fee cap for the next five years, to around £10,500.

Skills Minister Jacqui Smith said in the Commons, “The intention is that the tuition fee increase will apply to new and existing students”. The news site Wonk HE questioned the legality of increasing fees in the middle of a course, especially as students were not clearly made aware this was possible. The most callous justification was in Anglia Ruskin University’s small print “You won’t be obliged to continue with your course if you don’t wish to pay the increased fees.”

Labour also announced a 3.1 percent increase in maintenance loans, which it claimed would “provide as much as £414 extra per year to help students from the lowest income families.” But the increase is much lower outside of London, and any student whose family has an income of over £25,000—which from next year will be less than one parent working full time for the minimum wage—is not eligible for the maximum maintenance loan.

The maintenance loan has been massively eroded by inflation over the past few years, leaving many students reliant on working alongside their studies. Schools Week reported recently that the percentage of students from deprived backgrounds going to university fell between 2021-22 and 2022-23, the first decrease since 2005-06.

When the plan for the tuition fee increase was leaked to the press, it included a suggestion that the £3,500 non-repayable grant for the poorest students would be reinstated. Notably, there was no mention of this in the Phillipson’s final press release.

The fee hike is the latest in a series of betrayals of Labour’s promises to students. Starmer ran for the Labour leadership in 2020 on a pledge to abolish tuition fees. In May 2023, while still in opposition, Starmer told the BBC, “We do find ourselves in a different financial situation” and abandoned the commitment, but still claimed to believe that “university tuition fees are not working well” and claimed Labour would “set out a fairer solution”.

Even these vague suggestions of reducing the burden on students were walked back further in May 2024, when Phillipson said on Question Time that increasing fees “is a really, really unpalatable choice” but refused to rule it out.

Phillipson’s press release last week cited from Labour’s usual hymn-sheet, “The situation we have inherited means this government must take the tough decisions,” and downplayed the impact: “student loan borrowers will not see their monthly student loan repayments increase as a result of these changes.” This weasel wording conceals that monthly repayments will increase because Labour has retained and frozen the Tories’ lower repayment threshold.

Changes made by the Tories in 2022 mean that around two-thirds of students are now expected to repay their loans in full, so the increase in fees means they will pay more in total as well as facing a higher monthly payment. Student loan repayments take 9 percent of pay above £25,000, a threshold which was cut by the Sunak government from £27,295 for students beginning in 2023. At the time, Phillipson denounced the cut as “another stealth tax for new graduates starting out on their working lives, which will hit those on low incomes hardest”.

Labour has not only retained this stealth tax, but by freezing the threshold as prices and salaries increase is taking an even larger percentage of graduates’ pay. From April, anyone working 40 hours a week for just the minimum wage will earn above the threshold and have to begin making repayments on their student loan.

This is far from the last attack on students, both financially and on education itself. Public services including education are being cut in line with the dictates from big business and to allow a massive increase in military spending.

Cuts in jobs, courses and financial support for students are inevitable: 40 percent of universities are in deficit and one in three students surveyed by the Higher Education Policy Institute think tank said they were either very or quite worried their university “might go bust.”

The increase in fees will not resolve this funding crisis. It is expected to bring in only an additional £300 million, so will not even cover the additional £372 million national insurance contributions universities will pay to the exchequer after Labour’s recent budget, let alone rising costs due to inflation. University incomes have also suffered from a fall in applications from international students.

While camouflaging it with language about “high quality education that boosts [students’] life chances”, Labour has adopted the Tories attacks on courses which do not deliver an immediate economic benefit. The fee cap for classroom-based foundation year courses has been reduced, supposedly to “ensure that courses are delivered more efficiently”. In reality it will mean many of these courses are closed or have fewer contact hours.

Phillipson said, in another euphemism for cuts and subordinating education to profit-making, “Universities must deliver better value for money for students and taxpayers” and called for a “major package of reforms so they can drive growth around the country and serve the communities they are rooted in.”

The attacks on students are inseparable from the deterioration of conditions for higher education workers. Years of strikes over pay, precarious contracts, inequality and workloads were betrayed by the University and College Union bureaucracy, which treated the dispute as one against individual employers. It was hermetically sealed from the developing strike wave in the rest of the working class, and the demand for education to be funded as a social good, with securely employed educators, was never raised.

The first four months of Labour’s rule have proved that it is as intent as the Tories on following a programme of austerity and militarism. Phillipson wrote an article on October 7 for the Telegraph defaming students opposed to the genocide in Gaza as “anti-Semites”. She said university staff would be given the “skills to act quickly to root out anti-Semitism as soon as it emerges” i.e. that the universities would be empowered to clamp down on free speech.

German parliament adopts far-right “antisemitism” resolution

Johannes Stern

The adoption by the Bundestag (parliament) on Thursday of a so-called “antisemitism” resolution once again underlines the fact that the German ruling class supports genocide and has never truly broken with fascism. The resolution has nothing to do with the fight against antisemitism or the protection of Jewish life. It is an extreme right-wing text aimed at defending Israel’s genocide against the Palestinians and criminalising and suppressing any criticism of it under the false accusation of “antisemitism.”

Lawmakers attend a session of German parliament Bundestag in Berlin, Germany, Thursday, November 7, 2024. [AP Photo/Markus Schreiber]

In the context of Israel escalating the extermination of the Palestinian population in the Gaza Strip and expanding its genocidal war to Lebanon and the entire region, the resolution expresses solidarity with this policy. “We call on the government to continue to actively advocate for the existence and legitimate security interests of the state of Israel as a central principle of German foreign and security policy,” the adopted text states. 

And further: “Israel has the right, under international law, to defend itself against attacks in violation of international law and thus the recognised duty to protect its citizens from terror while upholding its obligations under international law. We call on the German government to continue to advocate for this right in international forums and with international partners.”

The Bundestag could not make its support for Israel’s genocide, which is estimated to have already killed more than 200,000 people, mostly women and children, any clearer.

To put it plainly: Israel has no “internationally enshrined right” to “defend” itself against the Palestinian people, whom it unlawfully oppresses and whose land it occupies. As the judge of the International Court of Justice, Navanethem Pillay, recently stated, “a distinction must be made” between Israel and Palestine, because “one is the occupier and the other is the occupied.”

In fact, the Israeli army is not fighting a defensive war, but an imperialist war of extermination. The real war aims go far beyond the destruction of Gaza. Israel serves as an extended arm for Berlin and the other imperialist powers to militarily enforce their economic and geostrategic interests in the Middle East and worldwide. The arming and support of the Israeli killing machine is part of the larger plan to bring the entire Middle East under imperialist control and to expand the war offensive against Russia and China.

As in the past, this requires the militarist enforced conformity of the whole of society. The resolution repeatedly calls on the German government to suppress the enormous opposition to the genocide even more harshly. “The German Bundestag reaffirms its decision to ensure that no funding is provided to organisations and projects that spread antisemitism, question Israel’s right to exist, call for a boycott of Israel or actively support the BDS movement,” the text reads.

Above all, the cultural sector and universities, which have repeatedly been the scene of numerous protests against the genocide, are to be cleansed. “There must be no room for antisemitism in the arts and culture or the media,” the resolution states. 

And at universities, “the proper conduct of events must be guaranteed.” “Antisemitic behaviour” must “have consequences.” Therefore, “schools and universities should be supported in continuing to make use of their legal options or to implement appropriate measures.” These include “the application of domiciliary rights, exclusion from teaching or studies, and even exmatriculation in particularly serious cases.”

The fact that this is not about fighting real antisemitism, but about suppressing opposition to genocide, is underlined by the resolution’s demand to use the International Holocaust Remembrance Association’s (IHRA) definition of antisemitism, which was adopted by the Bundestag in 2019, “as authoritative.” The IHRA definition is an ahistorical and anti-democratic construct that defines any political opposition to Zionism and to Israel’s oppression of the Palestinians as “antisemitic.”

It has long been a central element of a right-wing campaign that uses the accusation of “left-wing antisemitism” to criminalise the growing opposition, especially among workers and youth, to imperialism and war. The Bundestag resolution provocatively states that a purported increase in antisemitism since October 7 2023 “can also be traced back to a relativising approach and an increase in Israel-related and left-wing anti-imperialist antisemitism.”

If the resolution is titled “Never Again Is Now,” and cites the crimes of the Holocaust to justify the genocide of the Palestinians and the establishment of a dictatorship at home, that is the height of criminality. To put it bluntly, when Germany’s ruling class aligns itself with Israel’s genocide of the Palestinians, it is in fact aligning itself with its own genocidal traditions. 

And the same applies to the question of antisemitism. It is not the opponents of the genocide, including many Jews, who are promoting antisemitism, but the imperialist governments. The very attempt to associate Jewish people collectively with the murderous policies of the extreme right-wing Netanyahu regime is antisemitic through and through.

Nothing could make the deeply reactionary character of the resolution clearer than the fact it corresponds one-to-one with the policies of the Alternative for Germany (AfD)—a party whose leaders glorify Hitler’s Wehrmacht (Army), agitate against the Holocaust memorial in Berlin and stand in direct political and familial continuity with the Nazis who industrially exterminated 6 million Jews in the Holocaust. 

In her speech in the Bundestag, the deputy parliamentary leader of the AfD faction, Beatrix von Storch, said that by adopting the resolution, the federal government was implementing the racist and authoritarian programme of the far right. She said that “this joint motion” was “the admission of the former coalition parties [SPD, Greens and Liberal Democrats, FDP] and the CDU [Christian Democrats]” that the “explosion in antisemitism in Germany has something to do with immigration and Islam.” 

She said she could still well remember the gasps of shock and horror here, especially from the Greens, when the AfD warned about imported Muslim antisemitism. But now, she said, “we read in this motion, co-tabled by the Greens, about antiemitism that is based, and I quote, on immigration from the countries of North Africa and the Middle East.” 

And the motion’s “proposed solution” was also “directed at us: to exhaust repressive possibilities, particularly in criminal and citizenship law and in asylum and residence law. In plain speech: put Muslim antisemites on a plane and send them home. ‘Goodbye!’ and not ‘Auf Wiedersehen!”’

There is hardly anything more repulsive than a Nazi politician like Storch, granddaughter of Hitler’s finance minister Johann Ludwig Graf Schwerin von Krosigk, raving against Muslims—and ultimately also against Jews who are against genocide—in the name of combatting antisemitism, and threatening them with persecution and deportation. But this is the policy of the entire ruling class.

The motion following the line of the AfD was introduced into the Bundestag by the parties of the now failed three-party coalition—SPD, Liberal Democrats and Greens—and the Christian Democratic (CDU/CSU) faction. Although the Left Party abstained, its speaker Gregor Gysi left no doubt that his party supported the basic orientation of the resolution and Germany’s support for Israel and thus for the genocide. “The existence and security of Israel is part of Germany’s raison d’état,” he asserted. 

Only the deputies of the Left Party splinter group, the Sahra Wagenknecht Alliance (BSW) voted against the resolution. However, they were trying to cover their own tracks. Right at the beginning of the Gaza genocide, BSW representatives in the Bundestag, at that time still members of the Left Party parliamentary group, had unanimously supported tabling a pro-Israeli motion from the coalition parties and the CDU/CSU and celebrated it as a “German contribution in the fight against terror.”

Australia: New guidelines for toxic “forever chemicals” in drinking water allow levels 50 times higher than US

Jenny Campbell

New voluntary guidelines for maximum levels of per- and poly-fluoroalkyl substances (PFAS) in Australian drinking water will still allow far more of the toxic chemicals than regulations introduced in the US earlier this year.

Barwon River in northern New South Wales [Photo by NSW Water / CC BY 4.0]

The new guidelines were proposed in a statement last month by the National Health and Medical Research Council (NHMRC). The statement attempted to allay community concerns, in the wake of revelations made by Sydney Morning Herald (SMH) reporters earlier this year about high concentrations of PFAS in drinking water in the Blue Mountains, across New South Wales (NSW) and elsewhere around the country. The SMH investigations also exposed the lack of systematic testing of the domestic water supply.

The NHMRC called for the allowable level of PFAS in drinking water to be reduced from 560 to 200 parts per trillion for PFOA and 70 to 4 parts per trillion for PFOS.

By contrast, last April, the Environmental Protection Agency in the US introduced mandatory regulations for a reduction of both chemicals to 4 parts per trillion in the next five years, with a longer term non-mandatory goal of zero PFAS. This was based on a scientific consensus that there is no safe level of PFAS in drinking water.

Thus, the new Australian guidelines for PFOA would still be 50 times higher than the US rules announced in April, for a chemical the World Health Organisation’s International Agency for Research on Cancer concluded last December is carcinogenic to humans.

In addition, the NHMRC proposed guideline values of 30 nanograms per litre for PFHxS and 1,000 ng/L for PFBS, based on thyroid effects. 

PFAS are a group of around 10,000 chemicals, including PFOA, PFOS, PFHxS and PFBS, employed for their particular properties of repelling fluids. They have been used in sunscreen, non-stick frypans, grease-proof paper, firefighting foam, raincoats, umbrellas, carpet, shampoos, dental floss, eye makeup and a range of industrial applications.

Recent studies have calculated that 98 percent of people carry PFAS in their bodies to varying degrees, depending on their level of exposure through household items and their proximity to PFAS-polluted environments. PFAS have been detected in soil, the air and even in rain. Tests on aquatic animals, including fish, have also shown the widespread presence of PFAS, which presents another avenue of ingestion via the food chain.

They are called “forever chemicals” because they don’t break down in the environment or the human body. The accumulation of these chemicals in the body can lead to thyroid, kidney, liver and reproductive dysfunction, low birth weight and cancer.

A recent study, published in Science Direct, on the effect of perfluorobutane sulfonate (PFBS)—introduced as a supposedly safer replacement for PFOS—in nematodes illustrated that the chemical shortened their lifespan through mitophagy dysfunction. Mitophagy promotes longevity by identifying, removing, and recycling damaged or depolarised mitochondria within cells preventing them from producing inflammatory responses. The study drew a link between reduced mitophagy, which can be exacerbated by exposure to chemicals including PFAS, and early-onset Parkinson’s, Alzheimer’s and Huntington’s disease.

Despite an increasing raft of science pointing to PFAS’s detrimental effect on the human body, the chemicals are still being commercially manufactured and used in everyday items around the world. It is likely that a ban on the production and use of PFAS would prevent many thousands of widely sold products from being manufactured, significantly impacting the profits of the major corporations that use these dangerous chemicals.

The NHMRC’s non-mandatory guidelines will do nothing to ensure that the Australian drinking water supply is safe. Instead, the government agency is aiming to play down the major health risks posed by the presence of PFAS in the drinking water supply.

The statement claimed: “NHMRC considers that concentrations of PFAS below the proposed guideline values would not be expected to result in any significant risk to health over a lifetime of consumption.”

By contrast, Ian Wright, the water scientist from Western Sydney University who tested the initial Blue Mountains samples at the request of the SMH, bluntly told a concerned resident who asked at a community meeting last month what measures should be taken: “Don’t drink the water. Have it shipped in, even from Warragamba Dam, or buy spring water.”

While there are domestic water filtration systems that can filter out significant amounts of PFAS, they are expensive to install and require ongoing costs of regularly changing the filters involved in the reverse-osmosis process. Under conditions of a deepening cost-of-living crisis, these costs are prohibitive for many workers, as well as pensioners and the unemployed, placing safe drinking water, a basic human necessity, financially out of reach.

What would a planned, socialist response to the worldwide poisoning of water with “forever chemicals” look like? Firstly, immediate testing of all water catchments would be conducted to establish levels of PFAS and locations of particular concern. Scientists and engineers would be employed in the public interest as a matter of urgency. Intermediate measures to re-direct uncontaminated water to flush out contaminated catchments would be implemented. Plans to upgrade water treatment plants with industrial-scale reverse osmosis systems capable of filtering out PFAS would be put into immediate effect.

Fresh, filtered water would be supplied to households until such a time as piped water was safe to drink. PFAS manufacture would be banned and an education campaign about products containing PFAS would be undertaken to reduce household and environmental exposure.

Science, one of the main drivers of human progress and innovation, would be put to work to establish methods of breaking down PFAS in the environment. Currently, the only known way to destroy PFAS is incineration at temperatures of 1,800ºF (982ºC), a process that can still result in the release of toxic substances into the atmosphere.

Promising signs have already been identified in the form of sodium hydroxide, a chemical used to make soap, and dimethyl sulfoxide, a chemical approved as a medication for bladder pain syndrome. Experiments conducted at Northwestern University in the US in 2022 illustrated that PFAS exposed to sodium hydroxide and dimethyl sulfoxide at temperatures of 248ºF (120ºC) resulted in degradation of the chemical with no harmful by-products.

Under capitalism, however, high-cost measures to clean drinking water and research ways of ridding the environment of PFAS which don’t produce profits are considered an unacceptable expenditure.

Australian Labor government pushes phoney student debt relief in bid for youth votes

Eric Ludlow

The Australian Labor government of Prime Minister Anthony Albanese this week announced plans to reduce university student debts by 20 percent. The move, billed as a relief for Australians with substantial student loans, is wholly inadequate in dealing with the mounting cost-of-living crisis and is a cynical attempt to garner support among young people as a federal election looms.

Albanese announced the scheme alongside the Labor ministers for education, social services, and skills and training.

Labor, having been elected two-and-a-half years ago, has made no attempt to legislate the student debt cut. Instead, it is pitching the cuts to take place on June 1, 2025 as a promise to be fulfilled if Labor is returned to office. The cuts will also only apply to current debts, with future student debts incurred to remain unchanged.

Meanwhile, Labor has overseen the worst cost-of-living crisis in a generation which is affecting workers around the world. Financial stress for Australian working-class households was deepened earlier this week when the Reserve Bank of Australia refused to cut interest rates.

Along with mortgage repayments, soaring costs for food and other essentials, millions of Australians also face sizeable debts from paying thousands of dollars for university degrees.

Students at the University of Adelaide [Photo: University of Adelaide]

An estimated 3 million Australians are currently paying off their student debt—some of whom completed their studies decades ago. Repayments are made under the Higher Education Contribution Scheme (HECS) and the Higher Education Loan Program (HELP).

HECS-HELP debts are repaid through the tax system, with payments required once an individual’s annual income is more than $51,550. The minimum rate of repayment increases as income increases.

As part of Albanese’s pitch, the income threshold for repayments to begin will also be increased to $67,000.

The government claims that the 20 percent reduction in student debts will “wipe out” $16 billion dollars across the population out of a total $81 billion. The average student loan of $27,600, however, will only have $5,520 subtracted.

The latest move comes after the announcement in Labor’s budget in May that the government was going to “wipe out” $3 billion of student debt by reducing indexation of outstanding repayments to purportedly counter increasing inflation.

But none of this comes close to covering the financial burden of student debts, which are soaring.

Data from the Australian Taxation Office shows that the number of people with student loans exceeding $100,000 is skyrocketing. The figure is almost 57,000—up from 47,847 last year and more than double the 22,514 who owed over $100,000 in the 2018–19 financial year.

A substantial portion of student debt is expected to never be repaid within the lifetime of those who have studied.

The Australian Government Actuary estimated that 14.7 percent of new student debt incurred in 2019–20 would never be paid. In 2020–21, this increased to 15.1 percent and in 2021–22 it was 11.8 percent.

In that sense, the Albanese government is just cutting its losses. Much, if not all, of the 20 percent of student debt that will be erased was never going to be paid anyway because it is more exorbitant than the means of ordinary graduates.

The scheme’s announcement has been accompanied by claims from the Labor ministers that Labor is committed to a “fairer” education system.

This is a fraud intended to cover over the role that Labor has played—along with Liberal-National Coalition governments—in attacking public education over decades. This includes ending free tertiary education in 1989 under the Hawke-Keating Labor government which introduced HECS. Then in 2012–13, the Greens-backed Labor government under Julia Gillard cut $3 billion from tertiary education—the single largest cut to the sector in Australia’s history.

In recent years, Labor has made mealy-mouthed statements against fee hikes and the slashing of courses, particularly in the arts and humanities, carried out by Coalition governments. But as soon as it came into power, Labor continued and deepened these same policies.

This was highlighted in the pro-business Universities Accord unveiled earlier this year. That document paid lip service to tackling “disadvantage” among students. But at its core, the report outlines a further transformation of universities into pro-corporate institutions to produce job-ready graduates whose education is tied to the needs of big business and the military.

Labor’s manoeuvres on student debt will not make a dent in the growing financial stress experienced by the working class.

It is an attempt to put a progressive gloss on a government which is widely reviled for its program of austerity and militarism, including Labor’s open support for Israel’s war crimes in Gaza, the West Bank and Lebanon.

There are growing concerns that increasing numbers of young people view Labor with disdain. The illusion peddled for decades that the Labor party represents a “lesser evil” or “progressive” alternative to the Coalition is being washed away. It has been exposed in the eyes of millions as a pro-war, pro-business party.

Labor has overseen record military spending. Australia’s yearly budget for war is more than $50 billion and growing. In other words, the money being spent on machines of death could easily wipe out student debt within two years. This is in line with the war aims of US imperialism which is demanding that Australia be placed on the front lines of a catastrophic conflict being prepared with China—plans which the Albanese government has embraced fully.

In this process, Australian universities themselves are being transformed into hubs for the research and development of defence technologies, and the promotion of pro-militarist propaganda.

Under capitalism, ever-greater sums are diverted to militarism and into the coffers of the ultra-wealthy, while essential social programs such as education, healthcare and welfare are slashed.

Schools on rations: US education funding lags behind UNESCO benchmarks

Nancy Hanover

A recent report from the Education Data Initiative exposes the fact that the world’s richest imperialist country has underfunded schools for decades. It indicts the US for failing to meet global benchmarks for education and, despite economic growth, allocating proportionally less for schools.

Ann Arbor educators protest spending outside Pioneer High School in Michigan, May 20, 2024.

The report confirms what public school educators and staff experience every day—they are being forced to do more with less while millions of American children are being deprived of even a passingly adequate education. 

Expenditure for US public schools is “equivalent to 3.68 percent of taxpayer income” and 12.7 percent of public funding, according to the nonprofit research group. The UNESCO benchmark for minimum funding to ensure basic education for all is 4-6 percent of the GDP and 15-20 percent of total government spending.

Were the US to meet international standards, it would mean a leap from current spending of $878.2 billion to between $1.037 and $1.382 trillion annually. The amount of the Elementary and Secondary School Emergency Relief (ESSER) funding (begun in March 2020 and ending September 30, 2024), which the Biden/Harris administration allowed to lapse, was only $190 billion spread over four years. Currently, the K12 population in the US is about 50 million. 

The ending of ESSER funding—emblematic of the attitude of the ruling elites to public education—has been a body blow to a system already dangerously underfunded. The brief infusion of these limited funds improved educational outcomes and services in many districts. Students exceeded typical pre-pandemic annual improvements in reading and math, according to Harvard’s Center for Education Policy Research. In fact, the Harvard Center showed each $1,000 of ESSER spending would be worth $1,238 in students’ lifetime earnings alone. ESSER’s expiration is forcing many districts to carry through wholesale school closures, thousands of layoffs, and the elimination of essential educational offerings.

To reiterate, even if the US adhered to the lowest UNESCO minimum standards, annual education funding would substantially exceed what schools received during ESSER.

The numbers are an indictment of the successive administrations of Democrats and Republicans at both the state and federal levels. They particularly expose the claims of the Biden/Harris administration, which claimed to be “pro-education” and promoted First Lady Jill Biden’s membership in the pro-capitalist National Education Association (NEA). 

In another set of comparisons, the Education Data Initiative notes that the US is one of only nine countries that fail to provide any funding for early childhood education.

The US has other priorities. The Biden administration budgeted some $1 trillion for the military while allocating additional billions more specifically for the US/NATO war against Russia—the Kiel Institute for World Economy shows the US funding at $107 billion. The US/Israeli genocide in Gaza has been funded with about $18 billion since October 7, 2023, with another $20 billion authorized by Biden in August 2024. Spending for war comprises more than half of the US discretionary budget.

Education Data states that the combined federal, state, and local government support to public education is substantially below military spending, at $878.2 billion. This translates to $17,700 per pupil, with the federal government only comprising 13.6 percent of actual costs. 

States and localities provide the majority of school revenue, but overall funding lags behind real costs across the board. Averaged nationally, the deficit between funding and actual spending is $21 billion or $420 per pupil. Within these shortfalls, there is additional substantial variation. Idaho, for example, spends $9,390 per pupil on K12 education, Maine $19,310, and New York $33,400. The federal government provides just $1,310 for each K12 child in Utah and $4,370 for Alaskan students.

There is no mandate to provide all children access to the arts, tutoring or field trips. Parents would be excused in thinking it a “roll of the dice” if their children could attain life’s essential skills, much less real cultural enrichment at their local school.

Everywhere, programs are being slashed, the number of school days pared down, and educational resources scarce. But these problems are far worse in districts where property taxes are lower and people are poorer—the vast majority of the US.

The existing scenario provided by Education Data is bad enough, but 2024 and beyond will register far lower levels as a result of the Biden/Harris administration’s disastrous decision to end ESSER support.

The patchwork of funding is further skewed by regressive property taxes, state income taxes, millage increases and other local funding mechanisms. But from 2021 to 2024, a majority of states (28) have opted to cut the taxes of the wealthy and businesses instead of supporting schools. Additionally, over half of the states enacted school voucher measures, which further diverted public dollars away from public schools to private schools. In 2024, 14 states enacted new or expanded vouchers. 

How do districts deal with the resulting deficits? Loans and bonds, which increase the tax burden for workers. These measures are increasingly going down to defeat, as workers’ budgets reach the breaking point. In the November 2024 elections, Houston’s $4.4 billion bond proposal was defeated. Other regressive taxes for schools were defeated in St. Paul, Minnesota; Philadelphia, Pennsylvania; in 10 different district attempts across Central Ohio (including suburban Akron); Whitmore Lake schools in Michigan; Buckeye Valley, Delaware and many more. In Michigan alone, districts were attempting to raise $1 billion in new taxes. In Michigan, only about half of such measures typically pass, down from 70 percent from 2018-20.

The breakdown of public education, which has been the result of a bipartisan policy of prioritizing Wall Street profits and war, will intensify under the next Trump administration. As part of his plan to open the money spigots for the oligarchy, the Education Department is being targeted for destruction and massive cuts planned.

Breakup of Germany’s coalition government ushers in new phase of class struggle

Peter Schwarz

A few hours after Donald Trump’s election victory in the US, Germany’s Social Democratic Party-led coalition government broke down. Federal Chancellor Olaf Scholz (SPD) fired Finance Minister Christian Lindner of the liberal Free Democratic Party (FDP) on Wednesday evening. Shortly thereafter, with the exception of Transport Minister Volker Wissing, the other FDP ministers also resigned.

Vice Chancellor Robert Habeck, Chancellor Olaf Schultz and then Finance Minister Christian Lindner [Photo by Sandro Halank / Wikimedia Commons / CC BY-SA 4.0]

There is a close connection between the US election and the failure of the coalition. Experts expect Trump’s second term to be marked by new trade war measures against Europe and a partial US withdrawal from the war against Russia in Ukraine. They urge the German government to support the German economy with billions of dollars in the trade war and to increase arms spending enormously in order to continue the war in Ukraine and to be able to stand on its own two feet militarily. This requires massive attacks on the working class, which has to bear the costs of trade war and war.

In his statement justifying Lindner’s dismissal, Chancellor Scholz referred to Trump’s election victory and concluded: “It is clear that Germany will have to live up to its responsibilities. We need to stick together in Europe more than ever and continue to invest together in our own security and strength. Because the situation is grave. There is war in Europe. Tensions are rising in the Middle East.”

German Defense Minister Boris Pistorius (SPD) met with his French counterpart Sébastien Lecornu in Paris on Wednesday to discuss closer cooperation in European defense and integration of the defense industries. The next step is a meeting of five defense ministers to take place in Berlin, which will include Britain, Poland and Italy.

At the same time, Scholz continued, “Our economy is treading water. Our companies need support, and they need it now.” According to calculations, the 10 percent increase in American import tariffs on products from the EU threatened by Trump alone would burden Germany’s GDP with 127 billion euros. Not a week goes by without thousands of jobs being cut in the automotive, auto parts, steel, chemical and other industries.

Moritz Schularick, president of the Kiel Institute for the World Economy (IfW Kiel), spoke along the same lines as Scholz. “With the election victory of Donald Trump, the most economically difficult moment in the history of the Federal Republic begins, because we are now facing massive foreign economic and security policy challenges for the internal structural crisis, for which we are not prepared,” he wrote on the website of his institute.

He warned of “protectionist tariffs and import restrictions that will further weigh on growth in Germany and Europe” and demanded, “We need to invest massively in defense capabilities in the short term and move forward with France and other willing European partners to build European defense.”

After Lindner’s expulsion, Scholz made fierce accusations against his dismissed finance minister. He had irresponsibly resisted necessary compromises, “blocked laws with irrelevancies” and “pursued petty party-political tactics.” Instead of “acting seriously and responsibly,” he only takes care of “his own clientele” and “the short-term survival of his own party.” “Anyone who enters a government must act seriously and responsibly and not run for cover when things get difficult.”

The coalition government has been arguing about the future budget for months. It agreed to support the Ukraine war and business with billions. But there were differences on the question of financing. Lindner insisted on not taking on any additional debt. In early November, he leaked a paper to the media urging massive cuts in pensions, benefits and environmental regulations to fund rearmament and tax cuts for the wealthy.

Scholz considers this course too risky. He fears that such an open combination of rearmament, tax gifts to the rich and social cuts will provoke resistance in the working class, which even the trade unions can no longer suppress. He is therefore proposing a temporary suspension of the debt brake in order to be able to take out additional loans and thus gain more room for manoeuvre in stifling resistance to his anti-worker and militarist policies.

“Never, never should we play off internal, external and social security against each other,” he thundered against Lindner, who strictly rejects easing the debt brake. Scholz accused Lindner of seeking “billions in tax cuts for a few top earners and at the same time pension cuts for all pensioners. … This endangers our cohesion, this even endangers our democracy in the end.”

This is, of course, empty demagogy. Chancellor Scholz belongs to a party that has led the labor and the most important social ministries since 1998, with only four years of interruption, and is responsible for the largest redistribution of wealth in favor of the rich since the establishment of the Federal Republic. The former workers’ party today relies on political careerists, state functionaries, union bureaucrats and other members of the wealthy middle class. It is so hated that it is only achieving 15 percent in the polls and is trailing the far-right Alternative for Germany (AfD).

Like the Democrats in the US, which with their arrogance towards the falling living standards of the working masses, their support for the wars in Ukraine and Gaza, and their anti-refugee deportation policy paved the way for the fascist Trump to return to the White House, the SPD also strengthens the most right-wing elements with its policies.

Scholz worked closely with Lindner as inflation eroded real wages and rents, and energy prices exploded. In the meantime, he has appointed the former head for Germany at the US major bank Goldman Sachs, Jörg Kukies, as Lindner’s successor as Minister of Finance. Kukies already worked for Scholz when he was Federal Minister of Finance and has served him as State Secretary in the Chancellery since 2021.

Scholz has also turned for help to Christian Democratic Union (CDU) leader Friedrich Merz, the former head of the German branch of BlackRock, the largest asset manager in the world. He has asked Merz to work “constructively” with his minority government “in the rapid strengthening of our economy and our defence” sector and to support them by passing relevant laws.

On January 15, Scholz intends to table a vote of confidence in the Bundestag. Federal President Frank-Walter Steinmeier can then dissolve the Bundestag and call new elections in March, in which the CDU has the best chance of winning, according to current polls. The far-right AfD, which feels strengthened by Donald Trump’s election success, would also have a good chance of success.

For their part, the CDU, Christian Social Union, AfD and also the FDP are pushing for Scholz to raise the vote of confidence as early as next week, so that the federal election can take place in January. However, their options for achieving this are limited, as Germany’s Basic Law places strict restrictions on the premature dissolution of the Bundestag.

But regardless of how the political manoeuvres and clashes play out in the coming weeks, all established parties are in the process of shifting the axis of official politics far to the right after Donald Trump’s election victory. Enormous sums are available for rearmament, war and propping up the stock market, while the opposition to this is suppressed. All parties represented in the Bundestag agree on this.

Demands grow for UK Labour government to massively increase military spending

Robert Stevens

UK chancellor Rachel Reeves allocated a further £2.9 billion to military spending in last month’s Labour government budget, but this has only intensified complaints in ruling circles that this is “nowhere near enough”.

Labour, now four months in power, has still not committed to a date when it will meet an election pledge to ramp up military spending from its current level of just above 2 percent of GDP to 2.5 percent. On taking office, Labour said military spending decisions would be taken following a Strategic Defence Review (SDR) to be held next year.

UK's two aircraft carriers, HMS Queen Elizabeth (top) and HMS Prince of Wales (middle) in Portsmouth naval yard in March 2022. Another UK warship, the frigate HMS Richmond, is in the foreground.

Reeves vaguely said the government would “set a path to spending 2.5 percent of GDP on defence at a future fiscal event.”

With the election of US President Donald Trump this week (to take office on January 20), a chorus is growing that all delays must end and that military spending is hiked still further. Annual military spend is around £55 billion but it is being demanded that billions more must be handed over to the Ministry of Defence (MoD)—given Trump’s previous insistence that NATO’s European members increase military spending—or risk forfeiting US backing.

Reeves was unable to say when military spending would substantially increase because the economic and social impact of an immediate hike to pay for the deeply unpopular wars Britain is embroiled in, which threaten to escalate, would be severe and provoke opposition.

Conservative Party leadership contender Robert Jenrick—with eventual winner Kemi Badenoch saying she has hardly any policy disagreements—made reaching 3 percent military spending central to his campaign.

With a serious chance that Trump could take office, Jenrick agitated last month in the pages of the Telegraph that British imperialism would have to fall into line with the US on confronting China—on top of its current backing of wars on two fronts—Ukraine and the Middle East. Jenrick wrote, “To deter a Russian invasion of NATO, we must spend 3 percent of GDP on defence and make that the new NATO standard for all member states… We must prepare for an American pivot to the Indo-Pacific to contain China, which means the UK and Europe stepping up to defend against Russian belligerence. The age of freeloading has come to an end… We must wake up and urgently prepare for China to invade Taiwan within three years.”

More pressure on Labour to get with the programme is being made via debates in the House of Lords since Sir Keir Starmer’s party took office. In the first held on October 9—as Labour peer and former NATO head Lord Robertson introduced his planned defence review—crossbench peer and former Chief of the Defence Staff Lord Stirrup insisted, “Investment in defence needs to be above 3 percent of GDP, not the 2.5 percent that the government say that they aspire to but for which they have not so far set out a firm plan.”

A debate held last week as demanded by the Tories, tyo coincide with the budget, saw Viscount Trenchard ask the government, “What progress they have made in laying out the roadmap to spending 2.5 percent of gross domestic product on defence?”

He added, “[Wartime Prime Minister] Churchill was fond of quoting the Latin adage, ‘If you want peace, prepare for war’. In 1943 and 1944, more than 40 percent of GDP was spent on defence. If this country should again become directly embroiled in a major military conflict, it is reasonable to assume that the government would again have to spend a huge proportion of our national output on defence to fulfil their first duty.”

Labour’s reluctance to massively increase military spending meant “we are now placing our ability to provide leadership in military operations at risk because we have in recent years been increasing our defence expenditure at a much slower rate than other nations.” Trenchard cited “Germany, which in 2014 was spending only 1.2 percent of its GDP on defence, has committed to spend $97.7 billion on defence this year, which is an increase of 29.45 percent over 2023. France has increased its defence budget by 6.05 percent, and the United States by 7.21 percent. Against that, we have managed to provide an uplift of only 1.73 percent after adjustment for the implementation of the new accounting standard.”

Tory Lord Bilimoria said, “I am like a stuck record: in 2019… I first said that we should be spending 3 percent of our GDP on defence—not 2.5 percent but 3 percent. That was five years ago. Five years ago, there was no sign of Putin invading Ukraine, or of 7 October and the tragic situation in the Middle East since. Since the end of the Cold War and the fall of the Berlin Wall in 1989, we are closer to global conflict than ever before, and then 3 percent will be nowhere near enough.”

He summed up the dilemma facing the British ruling class over Ukraine, stating that it was correct to say that the UK couldn’t afford Ukraine to lose the war with Russia, “But the defence of Ukraine is possible only if the United States continues its support. It has provided over $100 billion of support; if it pulls out its support, that war is over. The election in America is next week; the repercussions will be very serious indeed and we must be prepared for that.”

Another Tory peer Lord Shinkwin castigated the government, saying “Ultimately, it is not a future fiscal event that is going to determine UK defence spending—it is a future military event, orchestrated by Putin and his allies.”

Hereditary Peer Lord Mountevans stated that recent Tory and Labour military spending—as with Reeves £2.9 billion—was of a one-off nature and represented “sticking plasters rather than a serious attempt to bring the forces to the level that is required in the current international and geopolitical condition.” There was no guarantee of continued “American support for NATO, especially if the Republican candidate were to succeed in the US presidential election next week. More generally, it has to be faced that attention in the United States is turning towards the Indo-Pacific. Europe will be expected to take greater responsibility for its own defence.”

The major problem was that “if the US is to continue to regard the UK as a key ally, we must maintain the fabric and capabilities of our Armed Forces. If not, they will regard us differently, as having less value as an ally.”

The scale of the war against the conditions of the working class needed to secure the tens and hundreds of billions required for imperialist war was spelt out by Baroness Buscombe. Making a “cursory comparison with our welfare spending alone”, she stated, “Taxpayers’ money is there but the priorities for government expenditure are just wrong… In April this year, the Government’s forecast for our total defence budget in 2024-25 was £55.6 billion. At the Department for Work and Pensions, figures for the same period forecast a spend of £315.8 billion on our social security system. Working-age benefits go to 9.3 million people, a huge proportion of whom are capable of working.”

Buscombe complained that “in contrast with our brilliant Armed Forces, benefit claimants receive a Christmas bonus [a £10 pittance] for doing nothing.” The opportunity wasn’t missed to scapegoat immigrants. It was “scandalous” that soldiers had to rely on charities to provide basic needs for their wardrobes and messes “given our current expenditure on fully serviced hotels and weekly cash payments given to illegal migrants”.

The Times plays a major role in demands for more military spending and leapt on comments by Labour Defence Minister John Healey that the Tories had underfunded the armed forces to such an extent that the UK was “ready to conduct military operations” but “What we’ve not been ready to do is to fight.” The Times noted, “It is understood that senior military chiefs inside the Ministry of Defence (MoD) share Healey’s view that if the armed forces were forced into combat any time soon [against Russia] they could lose in a fight.”

The Times editorialised that while Healey “has identified the problem… his government’s cure is inadequate… Slowly but surely, Britain’s capacity to fight a peer adversary was whittled away as defence ceded ground to more politically pressing concerns like health and ­welfare.

“It is crystal clear that this country should be spending 3 percent of GDP on defence. The international situation is the most perilous of modern times, with the Middle East in chaos, China menacing Taiwan, and Russia threatening to overwhelm Ukraine. Yet Labour, and the Conservatives before them, have failed to commit to 3 percent.”

While the government was talking about “charting a path” to higher military spending, “General Sir Roland Walker, the head of the army, says he needs to double his warfighting capability by 2028 and triple it by 2030. Planners, he warned recently, must work on the assumption of war with Russia in three years.”

At the Commonwealth Summit in Samoa (October 21-26), Starmer—with an eye to a Trump victory, announced that next year the Royal Navy would join patrols with Pacific island nations and the aircraft carrier HMS Prince of Wales will visit Singapore in 2025. The Times editorial was scathing commenting, “The Royal Navy… is sinking into insignificance. Its destroyer and frigate force could soon drop to 13 as ageing ships fall apart and replacements lag. Next year’s long-range deployment of a carrier will require a Norwegian stores ship because the UK’s sole example is inoperable.”