per capita

The Drum Opinion (ABC Online)

Our false cost of living crisis
Adam Clancy
Australians are facing a cost of living crisis: prices are soaring and family budgets are being pushed to breaking point.
Leaders of both major parties have been repeating this schtick ad nauseum in recent weeks and they could not be more wrong.
According to the Australian Bureau of Statistics, households are now saving more than 10 per cent of their income. It must be pretty hard to save that kind of money were the cost of living truly punching the kind of hole in our wallets that the Prime Minister and Opposition Leader would have us believe. Additionally, credit cards and mortgages are being paid off faster than at any time in recent memory, while the surging Aussie dollar continues to keep imports and petrol prices lower than would otherwise be the case.
Given the cacophony surrounding the cost of living debate, it is understandable that many Australians feel they are not as well off as the numbers suggest they are. Lost amid Julia Gillard's “dignity of work” speech at The Sydney Institute last week was the way the Prime Minister positioned the ALP as the party of fiscal responsibility.
Foreshadowing the spin that will accompany the government's upcoming spending cuts, Ms Gillard said her decision to reduce expenditure in key areas such as medical research is “the best way of helping Australians manage cost of living pressures.” It was similarly instructive when Tony Abbott defended his controversial attendance at an anti-carbon tax rally last month by arguing that “middle Australia” was “understandably angry... about how this carbon tax will hit their cost of living.” Cost of living may not be the new black, but it certainly appears to have replaced rising interest rates as the bogeyman of Australian politics.
It may seem counter-intuitive, but the cost of many goods is actually decreasing. Research by CommSec economists has revealed the average wage for Victorians now buys you more milk, bread, margarine, cheese, steak, chicken and petrol than it did a year ago. Additionally, nationwide, clothing is down six per cent, major household appliances are down four per cent, and audio/visual equipment has dropped 18 per cent in the past year. Nor does this accurately take into account the tremendous quality improvements in areas such as mobile phones, computers and TVs which are now hundreds of times faster – and considerably cheaper – than their predecessors.


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Adam Clancy is a researcher at Per Capita, a progressive think tank, working on cost of living and quality of life issues.