Cost of living is a dirty debate
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Because of the Liberal and Labor parties’ slavish dedication to earning the votes of outer-suburban swinging voters, we now find ourselves in a “cost of living” debate. “Cost of living” is in this context a misnomer. The more accurate term is “cost of consumption choices”. This is about Australians’ expectations that their expensive lifestyle choices will be supported by governments. Actual poverty, where the cost of living has real, everyday consequences, won’t feature in the campaign. There are no votes in addressing poverty. This is about telling middle-income Australians that their high-consumption lifestyles are a matter of legitimate public policy focus. Labor shamelessly exploited the issue in 2007, convincing voters they understood how tough they were doing it amid an unprecedented economic boom, high wage growth and consecutive tax cuts, and that John Howard and Peter Costello did not. Howard throughout his prime ministership had played an important role in legitimising voters’ expectations that governments should support their aspirations to have a high-income lifestyle even if they didn’t necessarily have quite high enough income. Private health insurance was subsidised; private education was as well; middle-class welfare was doled out by the bucketload. That those expectations ended up being deployed so effectively against Howard was one of Labor’s masterstrokes in that campaign. The Liberals are now trying to pull the same trick on Labor in this campaign — express deep concern about the cost of living, and couple it with larger versions of the government’s “modest assistance” to “help make ends meet” — pumping up the education rebate, indexing child-care rebates. If Labor had left the CPRS on the agenda, the Liberals would have pounded that as likely to drive up electricity prices. Instead they themselves are being pounded, with the paid parental leave levy being heavily targeted by Labor, who have now successfully linked the issue to grocery price rises. If Labor can make the levy issue stick, it will be deeply damaging for the Liberals. This is all rather unfair on Tony Abbott, because the PPL levy will have an absolutely minuscule effect on grocery prices. In fact it would be so small, it would be even tinier than the impact of the CPRS on prices, which was shown to be trivial — although Abbott, of course, gave the impression the CPRS would have caused a vast surge in prices. A nice case of what goes around comes around. The next stage of the cost of living campaign won’t be so welcome from Labor’s point of view. The conventional wisdom is that when the RBA meets next week, it will hold the fate of the government in its hands, because a rate rise will spell electoral doom for Labor. Maybe. But a 0.25% rate rise would leave the RBA’s cash rate target 2% below November 2007, and 2.5% below its March 2008 peak. Three of the Big Four banks did not automatically pass on the reductions in mortgage repayments occasioned by interest rate reductions (NAB’s policy is to pass them on on the next anniversary of the loan). According to one bank, in the months following the interest rate cuts, fewer than 20% of customers took the initiative to reduce their mortgage repayments as the RBA hit the emergency button and sent rates into freefall. Some of us doubtless subsequently did so, but it means the number of households facing actual increases in their mortgage repayments as a consequence of rate movements below the levels of two years ago — which next week’s will be, if there is one — is considerably fewer than appears to be assumed by commentators. It’s also one of the reasons why the argument that monetary policy was as important as fiscal stimulus in warding off recession doesn’t hold up — the RBA didn’t give us more cash to spend during the GFC because most of us just kept on paying our mortgages off at the same rate anyway. It won’t be until the cash rate gets up to 7% that many of us will be looking at increases in our repayments. The only group to whom that doesn’t apply is households that have taken on a new mortgage in the past two years, who started with repayments based on interest rates at emergency lows. That’s all mere detail, though. This is ultimately not about the real cost of living for people “doing it tough”, “trying to make ends meet”, “living within their means” and “setting their alarms early”. It’s about catering to the psychological and financial dependence of many voters on governments to prop up their lifestyles. As both parties have discovered in government, it’s awfully hard to ever satisfy these people, but they won’t give up trying to please them. |
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31 Comments
What I find interesting is that the KPMG figures on the front page of today’s Herald detailing the impact of an equivalent 2% rise in company tax (from 30% to 31% + no reduction fro 30%to 29%)
Food : 0.5%
Clothing Footware : 0.5%
Housing : 0.6%
Health : 0.3%
Transportatoin : 0.5%
Communication : 0.9%
Education : 0.2%
Financial/Insurance Services : 0.6%
Overall CPI : 0.5%
are exactly the same absolute figures as the effects of cutting the company tax by 2% (which was modelled in this report by KPMG in April) (from 30% to 28%) http://www.kpmg.com.au/Portals/0/KPMGEcontech-Report-CGE-Analysis-of-part-of-Governments-AFTS-Response.pdf
page 40
Food : -0.5%
Clothing Footware : -0.5%
Housing : -0.6%
Health : -0.3%
Transportation : -0.5%
Communication : -0.9%
Education : -0.2%
Financial/Insurance Services : -0.6%
Overall CPI : -0.5%
Has KPMG actually run the model again or did they (or the SMH) just decide to switch the signs around in the figures of the old report to change a decrease to an increase?
Where are all the people supposedly doing it tough though except those in the mortgage belt too dumb not to go into massive debt.
Not to worry Bernard. ‘tis all in hand.
First: we practice on Indigenous Australians. “Racial Discrimination Act’? We spit on it! ” (” Well we actually kind of sort of rescind it-troublesome bloody thing”).
Then: we hand out plastic cards so that our natives can by very expensive food from exploitative outlets (“Well we actually kind of sort of lead them to the path of true nutritionness”).
(” If the scanning equipment breaks down we have to fly in technocardscanfixers, which is OK. because our natives can live on seeds and grubs and things which they are familiar with”)
(“Or they can drive to other providers and make the choice between petrol cost and food. Choice is always a good thing.”).
Right. Sorted. (” The evidence shows this has not worked, but we are Government so we ‘refute’ that”).
Now: we roll it out for others (“we’ll avoid the oldies-they are a popular cause at the moment-and besides they have crumbly bones all they need is calcium tablets”).
(“The disabled don’t need nutritional guidance,-they have their hands full trying to get on buses , and into public buildings and disabledy things”).
The breeders - the bludgers- are to be led to the path of true nutritionness. (” They are not special. They are just easier to case manage”).
Right. Sorted.
Now for the whingeing bastards who are left.
We will feed the ‘illegals’. To them.
Right. Sorted.
Thank God for some sanity. People have incredibly short memories about interest rates, in my experience. I’ve had this conversation with people countless times: “Rates are going up again! “Yes because they were at emergency low levels because of the crisis. They were never intended to be kept that low.” “Still, they just keep going up. Someone should do something.” Sigh.
The really pernicious thing about the cost-of-living “debate” is that it taints every other substantive issue by causing people to focus exclusively on the state of their own personal balance sheet. To wit:
1. Immigration. The SMH had a feature the other day on voters in (where else) Lindsay. One of the women they interviewed said, to paraphrase: “why should we be letting asylum seekers in when we have Australians doing it tough? We have had to refinance our home, and we need renovations but now we can’t afford them, so I don’t see why we should have to pay for these queue-jumpers.” Quite right, lady, because clearly all that money we give asylum seekers (?) would be put to much better use subsidising your family’s renovations.
2. Fiscal policy. Tony Abbott during the debate was employing the following talking point: Australians have been doing it tough and tightening their belts, and they expect their government to do the same instead of running up debts. Well, they might, and in fact they probably do because, let’s face it, most people are economically illiterate. But the government’s ability to engage in counter-cyclical spending is a) a key distinction between private and public finance and b) what kept us from doing it a hell of a lot tougher in the first place.
3. And then there is climate policy, about which it is impossible to have a sensible conversation because people freak out every time somebody gently suggests that energy prices might rise as a result of any half-decent carbon reduction scheme.
Like Bernard says, none of this is about the poor - people who are genuinely living below the poverty line. It’s about the entitled middle class who can’t quite afford as much as they would like. Then again, when pollies rely on this kind of stuff to get elected, they can hardly complain when the electorate goes on to blame them for every 10c rise in the price of bread.
WEATHER REPORT …”The sky is falling down”!
The Arctic ocean is warming up, icebergs are growing scarcer and in some places the seals are finding the water too hot, according to a report to the Commerce Department yesterday from Consulafft, at Bergen, Norway.
Reports from fishermen, seal hunters and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone.
Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes. Soundings to a depth of 3,100 meters showed the gulf stream still very warm. Great masses of ice have been replaced by moraines of earth and stones, the report continued, while at many points well known glaciers have entirely disappeared. Very few seals and no white fish are found in the eastern Arctic, while vast shoals of herring and smelts which have never before ventured so far north, are being encountered in the old seal fishing grounds. Within a few years it is predicted that due to the ice melt the sea will rise and make most coastal cities uninhabitable.
Oh I’m sorry, I neglected to mention that this report was from November 2, 1922, as reported by the AP and published in “The Washington Post”.
Nearly 88 years ago but we’re still here !!!
Wow Astro, thanks for the info. Too bad I didn’t read your post ahahahahahaha
Ah, watching Julia and Anna on the news, I couldn’t help but wonder…
Who is the bigger sell-out?
Here we have a couple of fist-flying Socialist feminists from university days. They were the vanguard. They were out there on the barrricades: “Forward the revolution, Comrades!”
If each could see then what they have become, would they even recognise themselves?
You are getting really boring now Bernard. You know as well as I do the primary reason poverty and/or the plight of our underclass is not an issue in this election is because your fellow emotional vampires in the media rarely find it sexy enough to raise it as an issue. Without a concerted effort to educate the wider public about the importance of issues pertaining to the most marginalised people in our society, you know that average joe living in the epicentre of suburban self-interest simply doesn’t rape this is an issue on their aspirational hierarchy.
Of course, that’s the governments fault not yours, hey Bernard?
Or is it a function of your own journalistic psychological dependence on blaming politicians for everything and avoiding too much introspection about the huge part of the media plays in defining the parameters of the political battleground upon which all elections are fought
The single most powerful informing culture that dictates what issues will be of primary importance come election time is the media. This is the prism through which most people in our society received the vast majority of their information about politics and policy.
How is it we are now subjected to this relentless criticism of Labour campaign, a campaign that necessarily has to focus on issues of importance to swing voters in marginal seats - when the very same journalists now revelling in this critique have been spoon feeding fear based bullshit to the mushrooms in the marginals for years.
Of course, in a nation of knockers were criticism and negativity sell like salvation in Bible Belt USA, it is something of a soft option to continually give the public what they want. But now, having invested miles of column inches in the peddalling inflammatory rubbish about asylum seekers, population explosions, deficit doom and rorting of various stimulus programs by unscrupulous private sector operators, the media wants to whine about the narrow focus of the election.
I must have missed that special moment when gross hypocrisy was anointed as a 21st Century artform
Hear, Hear.
I am so sick of hearing about the people suffering from the cost of living while they drive around in new cars, and must have flat screen tvs/ stainless steel dishwashers etc.
It is well overdue for welfare to be pulled from the middle class and focused on the poor.
Hear! Hear! indeed! I often wonder what planet some people live on? I was made aware of this years ago(26+)when I used to volunteer on polling day. Some people front up and want to know why they’re there! I kid you not! Silly me even asked if they’d been on holidays overseas???I bet there’ll be some on Aug.21 also!
If people purchased their homes in the last couple of years, or even prior, why don’t they know what can and/or probably will happen to interest rates? Even if there is an increase, they’ll still be much less than in ‘07? Of course, this also goes back to msm! They just keep on pushing the bs line!Does it ever occur to some people that they have ‘champagne tastes on a beer budget’?They’re so tightly stretched, that a couple of interest rate rises puts them over the edge?
@CRISPYW - I agree. The people I really feel concerned about are those with a disability, or who are looking after a disabled person, either child or adult. There’s hardly any respite services. The carers end up sick themselves just through plain exhaustion and stress! It is shameful, that so much money is thrown at middle/high income people, while the real needy silently plod on!
As Bernard said, the poor aren’t even considered. I hate to think what the Coalition will do to pensions for example. However, compared to the people who are really doing it tough, I have no need to complain! I do thank Kevin Rudd for our increase of about $100 per fortnight. We should also receive an increase in the mid to late $20’s in October, but probably not from Abbott and Co.?Even if he said he’d adopt the govt’s method of assessing the increase - I don’t trust him!
Great piece Bernard. I am sick of the coutnry being held to ransom by bogans who refuse to live within their means.
Yep, and no politician would dare point any of this out lest they be labelled with the death mark “out of touch with ordinary Ostrayans”
Okay, Bernard, over to you - it’s about time the journalists wrote stories about what’s actually happening for single parents, unemployed people and their families, the elderly, and those with disabilities and chronic illnesses in post-GFC Australia, forgotten as they were in the last budget. What about doing some research and finding out what’s going on in the most disadvantaged suburbs, schools etc?
It’s also high time for an explanation of why we never hear from the welfare lobby on ABC radio news bulletins any more, as well as other ABC radio programming.
In other ways the ABC has become a values-free zone, as something I heard yesterday highlighted for me. Waleed Aly was a guest commentator on Lindy Burns’s Drive program on ABC Local Radio in Melbourne. Commenting on the boring nature of the election campaign, one of the other guests, whose name I haven’t been able to discover, made an incredibly ignorant remark along the lines of ‘well, there’s nothing really wrong in Australia at the moment’ (!).
Did the normally perspicacious Aly contradict him? Did he mention catastrophic climate change, one of the worst rates of species extinction in the world, outrageous hospital waiting lists, tax breaks for the rich at the expense of the poor, market rents so high they lead to homelessness, welfare quarantining, failing infrastructure etc? Nuh. He ummed and aahed. Earlier, he was telling listeners to get used to a dumbed-down election campaign - that’s the way it was going to be from now on, he told us (is that the attitude he displays to his politics students?) There’s a fine line between naming a problem and condoning it, and Aly crossed it.
This kind of quietitude is a danger to our democracy. What commentators like Aly, and indeed every journalist at the ABC, needs to understand - urgently - is that failing to promote basic values such as equity, equality, social justice and environmental stewardship is itself deeply political. Bernard forgets that too sometimes, especially when he gets caught up in the never-ending Canberra footy match!
I’ve got to agree with you CMAGREE. It should be noted that Aly is a professed conservative which,by definition, means he opposes change, preferring the status quo.
Bernard - You are committing a slight fallacy when it comes the efficacy of monetary policy. Whilst I generally believe that monetary policy can only avoid getting in the way rather than actively helping it, you’ve mischaracterised how it can have affects.
Simply because the media’s obsession is on home loans rates, this does not mean they are the be all and end all. Since it reduces the cost of lending for the lenders themselves (since financial institutions do not fund their loans out of their own piggy banks) it can help to ensure they are still willing to loan to those who want to borrow, importantly buisnesses.
These days its all “What about me”?!
“This is all rather unfair on Tony Abbott, because the PPL levy will”
And by no means should we be unfair to Tony Abbott.
The blatant insincerity of this man. Didn’t anyone else notice that he can read? Yeah, he was reading his part of the so-called great debate-from an autocue!
But let us not be unfair to him.
Pigswill
@VENISE - Indeed! Shock horror that we’d be unfair to Tony Abbott! I really can’t even bear looking at him! Gross!
About the atuocue! Are you serious? I admit I was busy during the debate, listening more than watching, I must admit, but how did he manage to wrangle an autocue? I’d have thought it would be against the rules that they both agreed to?
As to Waleed Ali! I heard him say he was a conservative, but then in a sense I am too! I want to conserve the planet, full stop! I want to conserve the Great Barrier Reef, and whales and ????So perhaps he was playing games with us when he asserted that he was a conservative? I’m disappointed in his reaction when on radio - I liked him on Q&A last week!
As to hearing from the welfare lobby. As a single aged pensioner, I get really weary from organising my expenses - thinking of what bill is around the corner; what groceries do I need; what’s on the horizon etc. It’s a real pain in the behind, and yet I know I’m much better off than many. Some pensioners were paying 80% of their pension in rent(prior to increase last Sept?). How do these people eat? Pay their electicity bills, telephone etc? They’re out of sight, out of mind!
SAME THING DAY AFTER DAY - TUBE - WORK - DINNER - WORK - TUBE - ARMCHAIR - TV - SLEEP - TUBE - WORK - HOW MUCH MORE CAN YOU TAKE? - ONE IN TEN GO MAD - ONE IN FIVE CRACKS UP” the slogan which was painted along a half-mile section of the wall beside the tube(railway) commuter route into London between Ladbroke Grove and Westbourne Park stations in west London many years ago.
Has anyone else noticed how little coverage the glowing endorsement of the ALP’s stimuls package US Nobel Prize Winning Economist Joseph Stigletz has been making over the past week.
His interview on this evenings 7.30 report is a must see …it’s on the ABC website
Acidic Muse , yes i saw that, very interesting. Makes the Fiberals look stupid and Joe, give up and be a stay at home Dad , even if you only get your wives wage under Abbott.
The Liberal Party living up to their Mean and Tricky Party , with new members getting a free Dog Whistle and a free Australian rag.
You can’t built cities based on farmlets. We have a small population but occupy an enormous lot of space. When the space gets dated, we vacate and spread out to the next allotment leaving vacated spaces to run down and allow weeds, highways or car yawning sales yards to take over.
Our cities are testament to not much more than huge areas of temporary dwellings housing a nomadic type of people also of a temporary nature ready to move, take the dollar and build something even flimsier and of shorter lifespan.
We then complain of our cities running out of space and blame increased immigration.
Even so, at least the tourists can get a good rest here. It’s very peaceful sauntering around the suburbs hardly seeing anyone about. zzzzzzzz.
Even so,
Fancy Abbott contemplating quarantining welfare payments for all. His true hatred for social issues coming to the fore. He then has the gall to say that he understands the plight of grocery bills paying families.
Let’s all get together on our knees and do a little prayer now; Let us pray and hope that after the 21 August he will go into permanent quarantine instead and that M.Turnbull will lead the libs.
@Acidic Muse
What a joke. Kevin Rudd’s adolescent critique of neo-liberalism in his silly essay in The Monthly wasan inexpert copying if not plagiarising of Joseph Stiglitz.
Stiglitz was WH adviser to Bill Clinton. The growth of Fannie and Freddie had much to do with him.
A famous devastating retort by his Columbia University colleague Jagdish Bhagwati says much about Stiglitz’s politics if not his wild critiques, political cause based, wrt the GFC:
“Stiglitz made a much-cited claim that the current crisis was for capitalism (and markets) the equivalent of the collapse of the Berlin Wall. Now, we know that all analogies are imperfect, but this one is particularly dicey. When the Berlin Wall collapsed, we saw the bankruptcy of both authoritarian politics and an economics of extensive, almost universal, ownership of the means of production and central planning. We saw a wasteland. When Wall Street and Main Street were shaken by crisis, however, we witnessed merely a pause in prosperity, not a devastation of it.”
Moreover Stiglitz coauthored a paper in 2002 titled “Implications of the New Fannie Mae and Freddie Mac Risk-Based Capital Standard.” This paper stated that “on the basis of historical experience, the risk to the government from a potential default on GSE debt is effectively zero.”
http://online.wsj.com/public/resources/documents/stiglitzrisk.pdf
That says all you would need to know before listening to the prognosticating if not to say, the politicking of a progressive lefty like Stiglitz.
Yes Acidic some non partisans noticed as well………
There are so many books and papers calling the GFC “the end of market economics” or similar apocalyptic outcry. Perhaps the sheer number of them convinced much of the public to see this as a rational prognosis rather than outright wishful doom-mongering and astronomical exaggeration. Joseph Stiglitz, Nobel Prize or not, has been wearing the cloak of a “moderate” or “middle way” economist for too long; it really is time he outed himself as an “end of history” follower of Hegel.
It is hard to think of anything sweeter than the thought of the residents/owners of Oz McMansions actually having to do it tough. Their insensate greed to shovel everything into their ‘I want it now’ mouths is despicable.
On the other hand, the thought of a labour government solemnly bowing obsequiously and begging for their votes is gorge-raising.
Any clod could inform our suck-witted Labour Party that these are the residents who would almost certainly vote for the Liberal Party. Why waste the tax-payers’ money even further by trying to buy the already bought.
Shame Julia, shame.
Just say it Venise! Stop pussyfootin’ around!
“Labor is no longer the party of us elites!”
Nobody knows better about what’s good for the jet-skiing, power-boatin Mcmansion-luvin’ scum than the Australian Watermelons.
Vote Green Venise…. complete the logic such as it is…….
I was reading Shitstorm, the recent book by Lenore Taylor and David Uren, trying to figure out what the Kitchen Cabinet were thinking when they decided that driving up land prices would somehow keep bread on the table of working families.
Quite interesting. It seems Rudd got to thinking about Ken Henry’s summary of Treasury advice for the stimulus - “Go early, go hard, go households” - and being Rudd, started thinking “what about houses?” i.e. supporting house prices. Households, houses, house prices - you can see how his mind works.
While Lindsay Tanner was still trying to figure out how Rudd, Swan and Gillard could talk themselves into conflating household consumption with house prices, Swan was claiming that if house prices dropped, owners would be “out of pocket” - i.e. in negative equity. Which is not the same thing at all.
Tanner never liked it, but he never quite got around to opposing it. He also never quite got around to pointing out that Australian borrowers did not have the option of walking away from mortgages, as Americans in negative equity had done in droves, causing the subprime collapse. When the decision to subsidize land prices while leaving business investment to take its chances was made without him - without any input from the one person in the kitchen cabinet who knows any economics at all - Tanner just kept on keeping on, as the government’s apologist on current affairs TV.
LIZ45:
Hi Liz. Yes, I was completely serious. I don’t know if he auto-cued the whole thing, as I turned off at the sixth ‘fair dinkum’, but if you can find a replay of it you will noticed where his eyes are focused.
They were either focused on an auto-cue, or on his God. I’ll leave you to arrive at the most credible of the two.
JAMESK: And up yours too!
How’s tricks apart from the political shambles?
No offence intended, James, but your candidate is the arse-end of mediocrity, and you know it.
Because Julia Gillard is trying to out-reach the Jesuit twat, doesn’t make him any better. It merely places him on the same trite level as herself.
At a time like this James, you should be trying to point out to the reading public the appalling paucity of, and lack of quality politicians we have in Oz.
Not trying to trash one candidate at the limited expense of another candidate.
As for my vote, Ha! I have a long list of people to put last, and I don’t know how I can fit all of them in the same box. I refuse to throw in the towel and vote informal. Nor will I sink to the Donkey vote. And, even though I may be forced to vote for the Greens doesn’t mean I trust them. Not one little bit.
Cheers
Venise
Yes,
where does this appalling paucity stem from?
Are we too full of oversize steaks or is it more due to growing up in oversize houses, or those mind-boglingly, blindfolded desolate suburbs?
Having had a dekka at the Gillard’s abode; jeez, no wonder. How can anyone survive that? Mind you, at least the fence was honest hardwood paling. Where and how did Abbott grow up and live. Has he been over exposed to zinc alume or Juliet Balconies?
Funny thing is, it starts alright with expectations of finally getting a ‘normal and progressive forward’ looking PM and then it collapses. Rudd with his thing about Bill Henson’s pictures and now Gillard with her ditherings on refugees and going endlessly forward.
Perhaps just whittling on a wooden stick with my pocket knife might give an answer. (Do they get paid enough?)
GERARD: This probably won’t get through to you because Crikey have a hate Venise vendetta going on against me.
I grew up in a house that was a bit like the one Julia Gillard has. I don’t remember it as being as bad as you say. Sure we used to call it rat’s castle, because the cats were scared of the rats.
Fashion turns and what used to be an impoverish area, is now the height of fashion. I go and look at it occasionally. But the whole street has become positively twee.
Anyway keep whittling! I’d do the same thing if I didn’t have an eye like an eel.
Multiple cheers
V