Former ACTU secretary Bill Kelty has delivered a blistering critique of the Albanese government’s economic record, warning Labor that Australians struggling with mortgages, housing costs and falling purchasing power will not be persuaded by statistics telling them they are better off.

Kelty, one of the most influential figures in Australian Labor history and a central architect of the economic agreements between unions and the Hawke and Keating governments, accused Prime Minister Anthony Albanese and Treasurer Jim Chalmers of talking past the lived experience of working households.

His message was characteristically direct.

“Don’t insult me.”

Kelty argued that government ministers could point to improvements in measures such as labour’s share of national income, but those indicators meant little to a worker whose wages bought less than they once did.

“You had the Treasurer say workers should be happy because their wage share is increasing, but their real wages are falling,” Kelty said in an interview published this weekend.

He described that argument as disconnected from the pressures households actually face.

“They can’t pay the bills, and you tell them your share of GDP is growing.”

Kelty’s intervention is politically uncomfortable for Labor because it does not come from the Coalition, a business lobby or an ideological opponent.

He led the Australian Council of Trade Unions from 1983 until 2000 and worked closely with Bob Hawke and Paul Keating through the era of the Prices and Incomes Accord, compulsory superannuation and sweeping economic reform.

He remains deeply identified with a Labor tradition built around the idea that economic reform must ultimately produce tangible gains for workers.

His complaint is that the current government risks losing sight of that test.

The latest data give both Kelty and the government ammunition.

Chalmers is correct that labour’s share of national income has increased.

According to Treasury’s interpretation of the June-quarter National Accounts, compensation of employees accounted for 54.3 per cent of income, compared with 49 per cent when Labor came to office.

Employee compensation rose 6 per cent over the year.

Treasury also pointed to a National Accounts measure showing real wages up 0.3 per cent through the year and real household gross disposable income per person up 0.9 per cent.

Those are not invented figures.

But Kelty’s criticism is that aggregate improvements of that kind can obscure a much weaker longer-term story about what a worker’s pay can actually buy.

OECD data support that concern.

Its 2026 Employment Outlook estimates Australian real hourly wages are about 5 per cent below their level in the first quarter of 2021, before the major post-pandemic inflation surge.

The OECD describes that as one of the steepest cumulative declines among advanced economies.

Australia’s real wage recovery has also recently stalled.

The latest ABS Wage Price Index rose 3.2 per cent over the year to the June quarter.

Consumer prices were rising more quickly: annual CPI inflation was 3.8 per cent in June and 3.5 per cent in July.

On that straightforward comparison, wage growth has recently failed to keep pace with inflation.

Different wage and inflation measures can produce different answers over shorter periods, which explains why Treasury can cite a slightly positive National Accounts real-wage figure while the OECD and WPI-based comparisons paint a weaker picture.

The broader point is harder to contest: Australians suffered a major loss of purchasing power during the inflation shock and much of that loss has not yet been recovered.

Kelty says that is what matters politically.

A worker who has lost ground in real terms since 2021 is unlikely to be reassured by being told labour now receives a larger percentage of GDP.

The same tension appears in housing.

Australia’s property market has finally moved down after years in which prices increased far faster than many household incomes.

Cotality’s national Home Value Index fell 0.9 per cent in August, its fifth consecutive monthly decline.

Values are now about 3.6 per cent below the national peak recorded in March.

Sydney has been hit harder, with values down 7.1 per cent from their recent peak, while expensive homes in Sydney and Melbourne have recorded double-digit declines at the top end.

On one level, falling prices should improve affordability.

If homes become cheaper while incomes stay constant, it becomes easier for people without property to buy.

But that is not what many potential buyers are experiencing.

The reason is interest rates.

The Reserve Bank has raised the cash rate three times this year, taking it to 4.35 per cent.

That has reduced borrowing capacity and increased repayments for households with variable-rate loans.

RBA Governor Michele Bullock has explicitly acknowledged that the increases are tough for mortgage holders already dealing with elevated inflation.

As a result, housing can become cheaper in dollar terms while becoming no more affordable — or even less affordable — in terms of the monthly repayment required to purchase it.

Recent affordability data illustrate the problem.

A household earning $125,000 a year can afford only around one in every 10 homes sold nationally, according to research reported by the ABC this month.

Mortgage repayments as a share of household income are at their highest level since 1989.

That is the paradox Kelty is attacking.

He accused Albanese of welcoming lower house prices while failing to acknowledge that high interest rates and weak real wages could make the actual task of buying a home harder.

The Prime Minister and Treasurer would dispute the suggestion that the government is simply celebrating a housing crash.

Chalmers has repeatedly acknowledged softness in the housing market and said higher interest rates were an important cause.

The government argues that moderating prices, increased housing supply and tax reforms designed to shift incentives towards owner-occupiers will improve affordability over time.

It has also pointed to stronger dwelling investment and improving building approvals as evidence that housing supply is beginning to respond.

But the political danger for Labor is the gap between an improvement that may emerge in future and what households experience today.

For a renter, lower headline property prices do not automatically produce a lower rent.

For a first-home buyer, a 5 per cent reduction in the price of a property can be overwhelmed by a large increase in borrowing costs.

For an existing homeowner with a large mortgage, falling property values can reduce household wealth while interest repayments rise.

That helps explain why the Reserve Bank says financial conditions are now restrictive and why consumer sentiment has deteriorated.

A Westpac-Melbourne Institute survey released this month showed consumer sentiment falling sharply, with mortgage holders particularly pessimistic.

The RBA itself says scheduled mortgage repayments are relatively high as a share of disposable income and that the full impact of this year’s rate increases is still working through the economy.

Inflation remains a major part of the squeeze.

The latest monthly CPI figure was 3.5 per cent in July, down from 3.8 per cent in June.

That is an improvement from earlier peaks but remains above the midpoint of the RBA’s 2–3 per cent target.

Underlying inflation, measured by the trimmed mean, was 3.6 per cent.

The RBA does not expect inflation to return to the middle of its target range until early 2028.

For households, that matters because declining inflation does not mean prices are returning to where they were before the cost-of-living crisis.

It means prices are rising more slowly from a much higher base.

Food, rent, insurance, utilities and housing costs accumulated large increases during the inflation shock.

A worker whose nominal wage has now begun increasing again must first recover the purchasing power lost during those earlier years.

Kelty’s anger is directed at what he sees as a political failure to communicate that reality honestly.

He does not argue that every Labor policy is wrong.

He has backed parts of the government’s agenda, including Medicare investment, HECS debt reductions and elements of its industrial relations and environmental reforms.

His criticism is broader: incremental measures are not producing enough improvement in workers’ living standards.

He wants the government to build substantially more homes, increase real wages, reform taxation and deal more aggressively with productivity and infrastructure costs.

“Build more housing and increase real wages, please,” he said.

The theme is consistent with remarks Kelty made separately this week when attacking a One Nation proposal that would allow workers to withdraw superannuation to pay rent or mortgages.

He argued that allowing people to raid retirement savings treats the symptom rather than the underlying problem.

“Fix housing. Fix wages. Don’t steal from their super,” he said.

That position reflects the philosophy behind much of Kelty’s career.

The superannuation system was not designed merely as a larger savings account. It was part of a broader attempt to improve workers’ long-term wealth while allowing economic reform to proceed.

Kelty’s modern criticism is that government should apply the same principle now: address the structural cause of falling living standards rather than produce schemes that move money around an increasingly stretched household balance sheet.

He has also warned Labor that the political consequences extend beyond economic policy.

Kelty believes dissatisfaction among working-class voters is creating an opportunity for One Nation.

That warning is particularly sensitive for a government facing a rising populist challenge on immigration, housing and cost-of-living issues.

Working voters who once regarded Labor as their natural political home do not necessarily move directly to the Coalition when they become dissatisfied.

Some turn to smaller parties promising a more dramatic break with existing policy.

Kelty’s argument is that Labor cannot answer that challenge solely by criticising One Nation or pointing to favourable macroeconomic statistics.

It needs workers to experience an improvement.

The government has a reasonable counter-case.

The economy continues to grow, unemployment remains comparatively low, business investment has been strong and household disposable income is beginning to recover.

June-quarter GDP grew 0.4 per cent and was 2.1 per cent higher over the year.

The government has also faced external shocks including the pandemic aftermath, global inflation and major disruptions to energy markets from overseas conflict.

Not every deterioration in household living standards can fairly be attributed to Canberra.

But governments are ultimately judged on outcomes as well as explanations.

That is why Kelty’s intervention is potentially more damaging than an ordinary opposition attack.

He is not arguing that the statistics are fake.

He is arguing that Labor is choosing statistics that tell a better story than many voters’ bank accounts.

A higher wage share of GDP can be good news.

So can falling property values if they eventually restore access to home ownership.

But neither is sufficient if wages are still worth less than five years ago, mortgage servicing is at generational highs and buyers cannot afford the repayments required to take advantage of lower prices.

Kelty’s demand is therefore less complicated than the economic indicators being debated.

Build more homes. Restore real wage growth. Improve productivity. Reduce the pressure on household budgets.

Then, he argues, Australians will not need a government statistic to tell them the economy is improving.

They will be able to feel it themselves.