I think the cost of living crisis is a phrase on everyone's lips, but it doesn't tell the whole story. I think there's a context of growing inequity and inequality in Australia.
We're constantly hearing that Australia is in a cost of living crisis, and we know that because the prices typical Australians pay for everyday things have been going up much faster than our wages.
The cost of living is useful in that that affects everybody. Everyone can see that their growthrough are going up, but I think it's also worth remembering that they're going up more for people who are already poor.
This is Casey Chambers. She's the executive director of Anglicare Australia. Anglic Care works with the poorest and most vulnerable Australians and that's who Casey is used to seeing, families, young people and children who are homeless or in crisis. But Casey says more and more people have been seeking help every day and they aren't the types of people should typically see.
I hesitate to use the word middle class. New people that you know a demographic wouldn't have seen before, and we're seeing them more often. We're actually seeing them in every fortnight, every pay cycle, and it's very common for us to be talking to people who are skipping meals, not ensuring the family car, not filling their scripts at
the pharmacist. People talking to us about the anxiety of every single day not knowing whether they're going to be able to afford the rent, or just praying that another bill won't come in just yet. And we'll start to see those people in our emergency housing services who are coming to those services saying, you know, I can only keep juggling the rent for another month, or I've just heard from the landlord that my rent's being put up
sixty dollars a week. What are my options? And unfortunately, the end part of that cascade is homelessness.
We do know, unfortunately many.
Many families around the country where kids are going to school from cars. We really should be able to find people places to be.
From Schwartz Media in seven Am, I'm Ashlin McGee. This is the cost inside the living crisis. This week, as we approach a federal budget that could define this government and that conditions so many of us are living with,
we're bringing you the cost inside the Living crisis. We're going to explore the impact this crisis is having on our country, why it just isn't ending, and whether our leaders are doing enough to protect our standard of living today Executive Director of the Australia Institute, Richard Dennis, and when prices will finally stop going up and the kind of country we risk turning into once it's finally over.
It's Monday, May thirteen, all right, Richard, I want to start with a question I think all of us are hoping there's an answer to, which is when does this cost of living crisis end?
Well, it ends when the people who sell us stuff stop jacking up the prices so fast. And the problem is that people who sell us stuff have had a great couple of years, So our cost of living crisis is their profit surge. And you know, we talk about like we're all in this together or something. Well know, when we talk about the cost of living, the cost of living, we make it this singular thing, the cost
of living. But of course there's twenty five million people out there that have all got entirely different costs of living. So the fact is young people in Australia are doing particularly tough because they're already on the lowest incomes, they're spending every cent they earn, if not actually going into debt. For a young person who moved out of home a year ago, who's in a low paid job, who's repaying their heck's debt, I'm telling you now, they are hurting bad.
And by historic standards, yeah, have really endured a reduction in their disposable income and their quality of life. You know, that's unprecedented in modern Australian history. So unfortunately, no one knows when the cost of living crisis will end, because it's not cause it's not that rain, it's not like a storm. It's not like we're waiting for nature to pass. What we're waiting for is for the people who sell us things to stop jacking up their prices so much
and get back to wages rising faster than prices. At the moment, we've got prices rising faster than wages. Again, that's good for the people who sell stuff, as bad for the people who work for living and buy stuff.
And so is this different from the kind of inflation crisis that we've seen in the past.
Yeah, no, it's really quite different. So no one knows when it will end. We don't know exactly what the Reserve Bank will do. We don't know what will happen, you know, the Russia's invasion of the Ukraine, and the oil price, and you know, all sorts of things. That's why we don't know. What we do know is that this really started after the COVID crisis ended.
If you thought you'd been paying more for meat, veggies and petrol over the past few months, you were right. Australia's annual inflation rate leapt to three point eight percent in the June quarter, the highest jump in more than a decade.
All of a sudden, people who had been locked away, unable to spend money, you know, stuck at home, working from home, no holidays, no going out to the movies, no going to see a band. All of a sudden, when people could actually go out and spend money again, they did, and they flooded out, and a whole bunch of people who sell things to those people thought, oh, I can't even fit you all on my plane, so I'll double the price of getting on my play.
Well, travel agents say they've never seen anything like it, with no such thing as cheap seats this summer, and airlines struggling to meet demand.
Or I can't fit you all in my restaurant, so I'll double the price of my restaurant meal. So another big part of it is both in Australia around the world, we get what we call supply chain bottlenecks. The big factories in China that made a lot of this stuff were severely disrupted by COVID.
What we're seeing now is that there's a lot of goods that are just stock in China.
They can't get out. I mean, if you want to get your goods to export them see from the port New Shanghai, you can't get them map because you can't even get the drivers to come and bring you. And then you've got the profit gouging, the price gouging. What you saw was a whole bunch of companies who were thinking, oh, well, it's been a while since I put up my price, and everyone else seems to be putting up their price at the moment. Now would be a good time for me to put up my price.
More than two thirds of our nation's inflation problem is made up of increased corporate profits, wages barely moving the dial from pre code.
So all of those things have combined and we've seen record inflation. I've seen real wages fall, which is pretty rare in Australia. And now now you know, things are coming back. You know, wages are starting to grow a bit, inflation is coming down a bit. But yeah, we're certainly not out of the woods. And while we might get out of the woods, we're going to wind up in a paddock that wasn't as nice as the paddock we were in Beforehead.
And Richard, you know, do you accept that consumer spending has been a big part of this or do you disagree with that?
Look, it's a part of it, but let's be clear, consumers isn't a thing. You're a consumer, I'm a consumer. What I do and what you do isn't the same. So some people are really hurting right now, and let's be clear, other people are having a great time right you know. CEO pay is doing fine, high income earners, wages arising faster than low and coome owners. Are consumers
out there still spending? Yes they are. But again, this is the problem when we treat the economy as this big singular thing, and when we talk about the cost of living, and when we talk about consumers as one big, cohesive, homogeneous group. We really miss what's happening Richard, this.
Cost of living crisis, this inflation was forecast to be over by now. So can you talk to me about who's been forecasting that? And you know, perhaps whether it's mystified some people in your profession economists, and you know why it hasn't ended yet.
My profession are mystified all the time. But you know, we're just really good at pretending that we know more than everyone else about what's going to happen. Look, no one has a crystal ball. And you know, basically at the Reserve Bank of Australia, the RBA has jacked up interest rates really fast and really high. And that's to be clear, designed to put a lot of pressure on people with mortgages. The idea. This is not an unintended consequence.
This is the plan. This is the lever. When you increase interest rates a lot and people's mortgage or payments go up a lot, the people whose mortgage or payments went up a lot spend a lot less at the movies, They spend a lot less at the supermarket, They spend a lot less on a whole bunch of things. Well, inflation is trending down, but why hasn't happened fast enough? How long is a piece of string? But inflation is
coming down, it is going in the right direction. I think it's wrong to get too obsessed with the inflation rate. It's dangerous and we might end up accidentally having a recession and causing a lot of unemployment and a lot of pain because some people are so worried about inflation being you know, four percent instead of three percent.
After the break, can the government ease the pain without first inflicting more of it.
So the budget will balance the near term pressures that people are under under and the longer term goals and opportunities in our economy. It will fight inflation without smashing the economy. It won't be a smash and grab budget because people are hurting and the economy is slowing. But there will be a premium on responsibility and restraint. There will be savings in the budget. There will be spending restraint in the budget.
So, Richard, as we head into a week where we're going to see this really important federal budget, I want to ask a bit more about that approach that you just spoke about. What is it that we could change or we could be doing differently as a country to combat it?
Oh well, what is it about that approach? Look, just to be clear, a lot of people like that approach. A lot of people at the reserve being like that approach, a lot of people in Treasury like that approach, a lot of people in Parliament like that approach, and a lot of economists like loading up pain on people to control inflation. I'm an economist, but I don't like that approach. I think interest rates have a role to play in managing the economy. I think inflation is something that you
want to take seriously. But I think there's a lot broader range of policy tools available for governments if they're worried about inflation, then simply loading up pain on young people with mortgages. So, for example, during COVID, we made childcare free. Guess what, when you make childcare free, you lower the cost of living because childcare counts in our
consumer price index. This is not terribly complicated stuff. And if we want to impose some pain on people, if we want to take some consumer demand out of the economy. Crazy thought, what if instead of tax cuts for high income earners we had tax increases for high income owners. What if we increase taxes on high income owners who were spending the interest they get on their deposits, on their Newtellian, their overseas holiday. We could take demand out
of the economy that way. But we live in a country where it's kind of heresy to talk about that, and it's big and important to say that consumers have to take their pain for the national good. Well, high income owners aren't taking their pain. They're about to get a four thousand dollars tax cut that could cause inflation. I don't hear many people complaining about that.
And so what appetite do you think there is in government now to take on those kind of big, sort of sacred cows really and make some big structural changes and also demonstrate confidently that those things are going to work.
Well, we know they work because we've done them before and they worked. There's nothing hypothetical about this. In last year's budget, Jim Chalmers took a leaf out of the book that I just described and designed a sort of an energy price supplement that was designed to improve people's cost of living and lower inflation. You asked about the appetite I think they're starving for this, but they also know that a change this big, a change in the way to admit the economy works, and a change in
the role of government in controlling inflation. They know that's a big task. And I suspect they're just kind of chipping away at the edges rather than saying, look, you know, this is a new problem. We need a new approach. As luck would have it, we've got one here we go.
So, Richard, you talk about the treasure Jim Chalmers taking at least one page out of your book last year. So as we're speaking a day out from the budget, what's the most urgent thing you'd like to see the Treasurer address on Tuesday night? And you know, maybe take another page out of your book.
Look, I don't mean to reject the premise of your question. There are so many urgent problems in Australia. Support for women fleeing domestic violence is urgent, Indigenous health in regional areas is urgent. The need to tackle climate change is urgent. There are lots of things we need to do. So for me, what's urgent is for the government to say out loud that Australia is one of the richest countries in the world, that we live at the richest point
in world history. And if we want to solve these problems, we can. But if we want to solve lots of problems, then we're going to have to do some big things differently. And Australia is one of the lowest tax countries in the world. That's a fact. Oe City website makes it clear. The PINCO lefties at the International Monetary Fund to make it clear. Australia is the third largest fossil fuel exporter in the world, but we collect more revenue from kids are paying their hex debt than we do from the
gas industry paying petroleum resource for rent tax. We spend twelve billion dollars a year subsidizing the fossil fuel industry. We should not be subsidizing fossil fuel expansion in twenty twenty four. We should be subsidizing better health care, better education,
better childcare, the role out of renewable energy. So we've got a kind of nineteen seventies budget even though we've got the problems of twenty twenty four, and until we change that, we'll get kind of stuck with well meaning people asking is it more important to invest in health or education. I don't know what about both. My favorite observation is in Norway they tax their oil industry and
give university degrees to kids for free. In Australia, we subsidize our fossil fuel industry and charge our kids are fortune to go to UNI. That's why budgets matter. Budgets are about choices, and we need to urgently make big, better choices.
So, Richard, I know it's not great to simplify the cost of living crisis, but I want to ask you about the legacy this is going to have on our country. So when we do finally exit this, is there a risk that if we don't get it right, some people are going to live with the consequences for longer than others.
Absolutely, and that's already happening. We're already seeing this. And this is not just brutally unfair to people who were unlucky enough to know just finish UNI at this point in history. It's brutally unfair to people who've become homeless or had to flee their home from domestic violence at this point in history. This is the real pain of neoliberalism. This is the real danger of decades of treating everybody as you know, well, if you're poor, it's because you
made bad choices. Austraya used to be the land of the sort of fair go. Now where the land of suck it up. You know, it's been decades of talk and we still haven't increased unemployment benefits. Child poverty in Australia is going up. But you know, for those earning over two hundred grand strap in lucky you you're about to get a four thousand dollars a year tax cut. That's proof that Australia is not making the big structural decisions that I think we need to make comma if
we want to solve these kind of problems. And to be clear, maybe we don't. Like maybe I'm shagging a rock here, Maybe most Australians are happy watching income inequality get worse, greenhouse gas emissions go up, and social cohesion declient. Not the kind of country I'd like to live in. But it is a democracy and we do elect people to Parliament to make these decisions for us. And that's why we have to be careful not to think that there's this thing like a cost of living crisis that's
like a cyclone that's buffeting your country. It's entirely imaginary. For people that own lots of houses and own lots of shares and earn lots of money, It's never been a better time to be really rich.
Richard, thanks so much for your time.
Thank you anytime.
When Richard Sais thinks the government is starting to make those bigger changes when it comes to where our tax dollars go and what we choose to subsidize, Casey Chambers from anglic Care thinks that too, and she's also a little more optimistic that they might actually go through with it.
We'd like to see the government start to and not just the government, but the government as leaders of our society, start to talk about the level of inequality we're willing to have. And I don't think most Australians are willing to have the level that we have, so we need to really work on it. We think that the government
does have an interest in social cohesion and equality. The fact that they went back and remodeled the tax cuts, which we're going to be grossly unfair, it is a really good sign and it gives us hope and optimism that this government does have the spine to do it, and that the community has a desire to see that.
Of course, we'll have to wait and see.
Also in the news today, Australia's voted yes at the UN General Assembly along with one hundred and forty two other nations, on a resolution that Palestine is qualified to join the UN as a full member. That would give the Palestinian delegation more rights and privileges. At the moment, Palestinians have an ambassador at the UN with observer status
as a non recognized state. Any official change to that would have to be granted by the fifteen member Security Council, where the US holds VETO powers, and the education ministers of five states have joined together to call on the Albanese government to do more to help them fund public schools in tuesday Nights budget. Under the current funding arrangements, the ACT is the only place where public schools are fully funded to the baseline school resourcing standard. I'm Ashlin McGee.
This is seven am.
Thanks for listening.
We'll say you again tomorrow.