On the most recent comparable data from the final three months of last year, living standards have gone backward.
While consumer prices increased by 0.7 of 1 per cent during that quarter, household incomes only went up 0.1 of 1 per cent.
That’s what we were told on Radio National yesterday.
Ben Phillips from Canberra University’s National Institute for Social and Economic Modelling says there’s a shift under way in our standard of living. Export prices are lower than they have been, the cost of services such as school education, electricity, and gas are going up. Incomes are not keeping pace.
Household debt is an issue.
Professor David Peetz of Griffith University says that the Bureau of Statistics’ wage price index, a key measure of household income, fell to its lowest level on record in the December quarter. He points out that the labour market is largely non-unionised and hence vulnerable with unemployment increasing.
The question is whether this is a temporary blip or the beginning of a longer trend. Given the commentary from the experts it’s looking like the latter.
In this context it looks as though interest rates will be on hold, given also that the CPI came in lower than expected. That was courtesy of falls in the price of furniture, clothing, footwear and car repairs, not big on my shopping list.
Given that the age of entitlement has ended, Treasurer Hockey is now looking at the Audit Commission big picture.
Fiscal stimulation seems very far from his mind. Hockey says “nothing is free” and warns that spending people have come to take for granted will be wound back. Co-payments and means tests are on the agenda.
I’m in favour of means tests, in moderation, but I fear Hockey’s ‘vision’ is to shrink Australia.
There are a number of things that could be contributing to drops in household incomes at the moment. For example, the run down of the mining construction boom is leading to very well paid workers in this area losing their jobs, working less hours or accepting jobs with lower hourly rates. Ditto all the coal miners that have been laid off recently.
Then there are the renewable energy workers who who are losing their jobs because of the uncertainty being created by Tea Party governments and……..
What we need right now is a transfer of money from the the well off to the poor not the opposite which Hockey’s “end of entitlement” is code for.
This article from Business Spectatormakes a strong case for increasing and defending taxes. It calls for reform of the media approach to reforming reporting and commentary on tax matters.
When Mr Hockey plunges the economy into recession will it be another “Recession we had to have”?
Zoot more or less took the words out of my mouth.
For some time now, as I may have mentioned before, I’ve been under the impression that the politicians who run this count don’t really have a clue what to do when it comes to managing the economy. Apart from reverting to Keynes if there’s a recession/depression. They are all flying by the seat of their pants and have no idea if what they’re doing will work or not.
Hockey is particularly stupid since he doesn’t seem to realise his nostrum of an austerity budget could suddenly throw us into an economic catastrophe. Then what will he do?