Australia has till now been spared the worst effects of the global crisis. Has the luck run out? We’ve been hearing, and spruiking, about danger. The approaching mining investment cliff, the descent from the terms of trade peak, the strangulation of manufacturing by the high value of the dollar and the weaknesses in China – an accumulation of bad debts in the financial sector, a property bubble and the eventual and potentially imminent slowdown.

In early September the Australian Financial Review warned: “The force that drove the rising living standards of the past decade – the fourfold rise in mining investment and the tripling of mineral prices in a decade – is now evaporating. Iron ore prices have dropped to a five-year low … real wages are falling. Unemployment is rising. Companies are generating profits by cutting their costs rather than by generating revenue growth.”

New research commissioned by CPA Australia, the peak body of accountants, suggests that the impact of these economic factors is substantial. A preliminary review of almost 16,000 business audits, representing 98 percent of Australian Securities Exchange listed companies, has found a significant increase in “going concern warnings” (which question the future viability of a business). “Almost a third of ASX listed companies [are] at risk of financial catastrophe”, warned CPA Australia chief executive Alex Malley on 24 September.

The report found that in the two years prior to the 2008 global economic crisis, red flags were raised in 12 percent of ASX company audits. The figure increased to 22 percent in the following two years and reached a peak of 33 percent in 2013. Fifty-eight percent of the smallest listed companies received warnings last year. “It really begs the question how our economy would be placed were we to face another shock like the GFC”, said Malley.

His fears may have been heightened by new predictions of global stagnation. The International Centre for Monetary and Banking Studies’ 16th annual Geneva Report, released on 29 September, cautions that “potential output growth in developed economies has been on a declining path since the 1980s … the crisis has caused a further, permanent decline in both the level and growth rate of output. Moreover, we observe that output growth has been slowing since 2008 also in emerging markets, most prominently China …

“Deleveraging [paying down debt] and slower nominal growth are in many cases interacting in a vicious loop, with the latter making the deleveraging process harder and the former exacerbating the economic slowdown … it is already clear that developed economies must expect prolonged low growth or another crisis.”

Others such as the World Trade Organization and some of the large international banks are also warning of slowing growth. They are revising downward earlier predictions of expansion.

The Geneva Report shows Australian government debt to be among the lowest in the world. Household debt, however, is now at record highs. In the early 1980s it was equivalent to 20 percent of GDP. Today it is 110 percent, and 150 percent of household disposable income – one of the highest levels in the world. The growth overwhelmingly is accounted for by a house price bubble that has sucked in both owner occupiers and investors. (The latter constitute more than 40 percent of successful loan applications.)

Any economic shock could be therefore be disastrous on different fronts for workers in Australia: a further, and potentially significant, increase in unemployment; downward pressure on already falling wages; an increase in already unsustainable debt burdens; and potentially a downward spiral into negative equity (debts greater than the value of assets) in the case of housing price declines.

There is a great deal of uncertainty on all these fronts. There isn’t a great deal to be gained speculating on the question that forms the title of this article. But some things are abundantly clear. CPA Australia is using its findings to generate a sense of urgency about the need “to address the competitiveness challenges that lay ahead”. So too are other peak employer bodies. The press continue to do likewise. “We have become complacent, and ill-prepared for the tough choices that will have to be taken to restart the rising living standards that have become a virtual national entitlement”, lectures the AFR.

The recent racist hysteria about Muslim terror in our midst, and the current march to war, has provided a great distraction. The ruling class wants reduced wages and the gutting of penalty rates. It wants new laws that make it easier to sack people. It is calling for a greater tax burden to be placed on those at the bottom of society. And it wants to further hamstring unions to make it harder for workers to fight for their rights and entitlements.

In any future economic crisis, the bosses will be out to make workers pay the cost of capitalism’s failures.

Twitter: @Benji_Hillier