Speaker 1: I think the cost of living crisis is a phrase
Speaker 1: on everyone's lips, but it doesn't tell the whole story.
Speaker 1: I think there's a context of growing inequity and inequality
Speaker 1: in Australia.
Speaker 2: We're constantly hearing that Australia is in a cost of
Speaker 2: living crisis, and we know that because the prices typical
Speaker 2: Australians pay for everyday things have been going up much
Speaker 2: faster than our wages.
Speaker 1: The cost of living is useful in that that affects everybody.
Speaker 1: Everyone can see that their growthrough are going up, but
Speaker 1: I think it's also worth remembering that they're going up
Speaker 1: more for people who are already poor.
Speaker 2: This is Casey Chambers. She's the executive director of Anglicare Australia.
Speaker 2: Anglic Care works with the poorest and most vulnerable Australians
Speaker 2: and that's who Casey is used to seeing, families, young
Speaker 2: people and children who are homeless or in crisis. But
Speaker 2: Casey says more and more people have been seeking help
Speaker 2: every day and they aren't the types of people should
Speaker 2: typically see.
Speaker 1: I hesitate to use the word middle class. New people
Speaker 1: that you know a demographic wouldn't have seen before, and
Speaker 1: we're seeing them more often. We're actually seeing them in
Speaker 1: every fortnight, every pay cycle, and it's very common for
Speaker 1: us to be talking to people who are skipping meals,
Speaker 1: not ensuring the family car, not filling their scripts at
Speaker 1: the pharmacist. People talking to us about the anxiety of
Speaker 1: every single day not knowing whether they're going to be
Speaker 1: able to afford the rent, or just praying that another
Speaker 1: bill won't come in just yet. And we'll start to
Speaker 1: see those people in our emergency housing services who are
Speaker 1: coming to those services saying, you know, I can only
Speaker 1: keep juggling the rent for another month, or I've just
Speaker 1: heard from the landlord that my rent's being put up
Speaker 1: sixty dollars a week. What are my options? And unfortunately,
Speaker 1: the end part of that cascade is homelessness.
Speaker 3: We do know, unfortunately many.
Speaker 1: Many families around the country where kids are going to
Speaker 1: school from cars. We really should be able to find
Speaker 1: people places to be.
Speaker 2: From Schwartz Media in seven Am, I'm Ashlin McGee. This
Speaker 2: is the cost inside the living crisis. This week, as
Speaker 2: we approach a federal budget that could define this government
Speaker 2: and that conditions so many of us are living with,
Speaker 2: we're bringing you the cost inside the Living crisis. We're
Speaker 2: going to explore the impact this crisis is having on
Speaker 2: our country, why it just isn't ending, and whether our
Speaker 2: leaders are doing enough to protect our standard of living
Speaker 2: today Executive Director of the Australia Institute, Richard Dennis, and
Speaker 2: when prices will finally stop going up and the kind
Speaker 2: of country we risk turning into once it's finally over.
Speaker 2: It's Monday, May thirteen, all right, Richard, I want to
Speaker 2: start with a question I think all of us are
Speaker 2: hoping there's an answer to, which is when does this
Speaker 2: cost of living crisis end?
Speaker 3: Well, it ends when the people who sell us stuff
Speaker 3: stop jacking up the prices so fast. And the problem
Speaker 3: is that people who sell us stuff have had a
Speaker 3: great couple of years, So our cost of living crisis
Speaker 3: is their profit surge. And you know, we talk about
Speaker 3: like we're all in this together or something. Well know,
Speaker 3: when we talk about the cost of living, the cost
Speaker 3: of living, we make it this singular thing, the cost
Speaker 3: of living. But of course there's twenty five million people
Speaker 3: out there that have all got entirely different costs of living.
Speaker 3: So the fact is young people in Australia are doing
Speaker 3: particularly tough because they're already on the lowest incomes, they're
Speaker 3: spending every cent they earn, if not actually going into debt.
Speaker 3: For a young person who moved out of home a
Speaker 3: year ago, who's in a low paid job, who's repaying
Speaker 3: their heck's debt, I'm telling you now, they are hurting bad.
Speaker 3: And by historic standards, yeah, have really endured a reduction
Speaker 3: in their disposable income and their quality of life. You know,
Speaker 3: that's unprecedented in modern Australian history. So unfortunately, no one
Speaker 3: knows when the cost of living crisis will end, because
Speaker 3: it's not cause it's not that rain, it's not like
Speaker 3: a storm. It's not like we're waiting for nature to pass.
Speaker 3: What we're waiting for is for the people who sell
Speaker 3: us things to stop jacking up their prices so much
Speaker 3: and get back to wages rising faster than prices. At
Speaker 3: the moment, we've got prices rising faster than wages. Again,
Speaker 3: that's good for the people who sell stuff, as bad
Speaker 3: for the people who work for living and buy stuff.
Speaker 2: And so is this different from the kind of inflation
Speaker 2: crisis that we've seen in the past.
Speaker 3: Yeah, no, it's really quite different. So no one knows
Speaker 3: when it will end. We don't know exactly what the
Speaker 3: Reserve Bank will do. We don't know what will happen,
Speaker 3: you know, the Russia's invasion of the Ukraine, and the
Speaker 3: oil price, and you know, all sorts of things. That's
Speaker 3: why we don't know. What we do know is that
Speaker 3: this really started after the COVID crisis ended.
Speaker 4: If you thought you'd been paying more for meat, veggies
Speaker 4: and petrol over the past few months, you were right.
Speaker 4: Australia's annual inflation rate leapt to three point eight percent
Speaker 4: in the June quarter, the highest jump in more than
Speaker 4: a decade.
Speaker 3: All of a sudden, people who had been locked away,
Speaker 3: unable to spend money, you know, stuck at home, working
Speaker 3: from home, no holidays, no going out to the movies,
Speaker 3: no going to see a band. All of a sudden,
Speaker 3: when people could actually go out and spend money again,
Speaker 3: they did, and they flooded out, and a whole bunch
Speaker 3: of people who sell things to those people thought, oh,
Speaker 3: I can't even fit you all on my plane, so
Speaker 3: I'll double the price of getting on my play.
Speaker 4: Well, travel agents say they've never seen anything like it,
Speaker 4: with no such thing as cheap seats this summer, and
Speaker 4: airlines struggling to meet demand.
Speaker 3: Or I can't fit you all in my restaurant, so
Speaker 3: I'll double the price of my restaurant meal. So another
Speaker 3: big part of it is both in Australia around the world,
Speaker 3: we get what we call supply chain bottlenecks. The big
Speaker 3: factories in China that made a lot of this stuff
Speaker 3: were severely disrupted by COVID.
Speaker 5: What we're seeing now is that there's a lot of
Speaker 5: goods that are just stock in China.
Speaker 3: They can't get out. I mean, if you want to
Speaker 3: get your goods to export them see from the port
Speaker 3: New Shanghai, you can't get them map because you can't
Speaker 3: even get the drivers to come and bring you. And
Speaker 3: then you've got the profit gouging, the price gouging. What
Speaker 3: you saw was a whole bunch of companies who were thinking, oh, well,
Speaker 3: it's been a while since I put up my price,
Speaker 3: and everyone else seems to be putting up their price
Speaker 3: at the moment. Now would be a good time for
Speaker 3: me to put up my price.
Speaker 6: More than two thirds of our nation's inflation problem is
Speaker 6: made up of increased corporate profits, wages barely moving the
Speaker 6: dial from pre code.
Speaker 3: So all of those things have combined and we've seen
Speaker 3: record inflation. I've seen real wages fall, which is pretty
Speaker 3: rare in Australia. And now now you know, things are
Speaker 3: coming back. You know, wages are starting to grow a bit,
Speaker 3: inflation is coming down a bit. But yeah, we're certainly
Speaker 3: not out of the woods. And while we might get
Speaker 3: out of the woods, we're going to wind up in
Speaker 3: a paddock that wasn't as nice as the paddock we
Speaker 3: were in Beforehead.
Speaker 2: And Richard, you know, do you accept that consumer spending
Speaker 2: has been a big part of this or do you
Speaker 2: disagree with that?
Speaker 3: Look, it's a part of it, but let's be clear,
Speaker 3: consumers isn't a thing. You're a consumer, I'm a consumer.
Speaker 3: What I do and what you do isn't the same.
Speaker 3: So some people are really hurting right now, and let's
Speaker 3: be clear, other people are having a great time right
Speaker 3: you know. CEO pay is doing fine, high income earners,
Speaker 3: wages arising faster than low and coome owners. Are consumers
Speaker 3: out there still spending? Yes they are. But again, this
Speaker 3: is the problem when we treat the economy as this
Speaker 3: big singular thing, and when we talk about the cost
Speaker 3: of living, and when we talk about consumers as one big, cohesive,
Speaker 3: homogeneous group. We really miss what's happening Richard, this.
Speaker 2: Cost of living crisis, this inflation was forecast to be
Speaker 2: over by now. So can you talk to me about
Speaker 2: who's been forecasting that? And you know, perhaps whether it's
Speaker 2: mystified some people in your profession economists, and you know
Speaker 2: why it hasn't ended yet.
Speaker 3: My profession are mystified all the time. But you know,
Speaker 3: we're just really good at pretending that we know more
Speaker 3: than everyone else about what's going to happen. Look, no
Speaker 3: one has a crystal ball. And you know, basically at
Speaker 3: the Reserve Bank of Australia, the RBA has jacked up
Speaker 3: interest rates really fast and really high. And that's to
Speaker 3: be clear, designed to put a lot of pressure on
Speaker 3: people with mortgages. The idea. This is not an unintended consequence.
Speaker 3: This is the plan. This is the lever. When you
Speaker 3: increase interest rates a lot and people's mortgage or payments
Speaker 3: go up a lot, the people whose mortgage or payments
Speaker 3: went up a lot spend a lot less at the movies,
Speaker 3: They spend a lot less at the supermarket, They spend
Speaker 3: a lot less on a whole bunch of things. Well,
Speaker 3: inflation is trending down, but why hasn't happened fast enough?
Speaker 3: How long is a piece of string? But inflation is
Speaker 3: coming down, it is going in the right direction. I
Speaker 3: think it's wrong to get too obsessed with the inflation rate.
Speaker 3: It's dangerous and we might end up accidentally having a
Speaker 3: recession and causing a lot of unemployment and a lot
Speaker 3: of pain because some people are so worried about inflation
Speaker 3: being you know, four percent instead of three percent.
Speaker 2: After the break, can the government ease the pain without
Speaker 2: first inflicting more of it.
Speaker 6: So the budget will balance the near term pressures that
Speaker 6: people are under under and the longer term goals and
Speaker 6: opportunities in our economy. It will fight inflation without smashing
Speaker 6: the economy. It won't be a smash and grab budget
Speaker 6: because people are hurting and the economy is slowing. But
Speaker 6: there will be a premium on responsibility and restraint. There
Speaker 6: will be savings in the budget. There will be spending
Speaker 6: restraint in the budget.
Speaker 2: So, Richard, as we head into a week where we're
Speaker 2: going to see this really important federal budget, I want
Speaker 2: to ask a bit more about that approach that you
Speaker 2: just spoke about. What is it that we could change
Speaker 2: or we could be doing differently as a country to
Speaker 2: combat it?
Speaker 3: Oh well, what is it about that approach? Look, just
Speaker 3: to be clear, a lot of people like that approach.
Speaker 3: A lot of people at the reserve being like that approach,
Speaker 3: a lot of people in Treasury like that approach, a
Speaker 3: lot of people in Parliament like that approach, and a
Speaker 3: lot of economists like loading up pain on people to
Speaker 3: control inflation. I'm an economist, but I don't like that approach.
Speaker 3: I think interest rates have a role to play in
Speaker 3: managing the economy. I think inflation is something that you
Speaker 3: want to take seriously. But I think there's a lot
Speaker 3: broader range of policy tools available for governments if they're
Speaker 3: worried about inflation, then simply loading up pain on young
Speaker 3: people with mortgages. So, for example, during COVID, we made
Speaker 3: childcare free. Guess what, when you make childcare free, you
Speaker 3: lower the cost of living because childcare counts in our
Speaker 3: consumer price index. This is not terribly complicated stuff. And
Speaker 3: if we want to impose some pain on people, if
Speaker 3: we want to take some consumer demand out of the economy.
Speaker 3: Crazy thought, what if instead of tax cuts for high
Speaker 3: income earners we had tax increases for high income owners.
Speaker 3: What if we increase taxes on high income owners who
Speaker 3: were spending the interest they get on their deposits, on
Speaker 3: their Newtellian, their overseas holiday. We could take demand out
Speaker 3: of the economy that way. But we live in a
Speaker 3: country where it's kind of heresy to talk about that,
Speaker 3: and it's big and important to say that consumers have
Speaker 3: to take their pain for the national good. Well, high
Speaker 3: income owners aren't taking their pain. They're about to get
Speaker 3: a four thousand dollars tax cut that could cause inflation.
Speaker 3: I don't hear many people complaining about that.
Speaker 2: And so what appetite do you think there is in
Speaker 2: government now to take on those kind of big, sort
Speaker 2: of sacred cows really and make some big structural changes
Speaker 2: and also demonstrate confidently that those things are going to work.
Speaker 3: Well, we know they work because we've done them before
Speaker 3: and they worked. There's nothing hypothetical about this. In last
Speaker 3: year's budget, Jim Chalmers took a leaf out of the
Speaker 3: book that I just described and designed a sort of
Speaker 3: an energy price supplement that was designed to improve people's
Speaker 3: cost of living and lower inflation. You asked about the
Speaker 3: appetite I think they're starving for this, but they also
Speaker 3: know that a change this big, a change in the
Speaker 3: way to admit the economy works, and a change in
Speaker 3: the role of government in controlling inflation. They know that's
Speaker 3: a big task. And I suspect they're just kind of
Speaker 3: chipping away at the edges rather than saying, look, you know,
Speaker 3: this is a new problem. We need a new approach.
Speaker 3: As luck would have it, we've got one here we go.
Speaker 2: So, Richard, you talk about the treasure Jim Chalmers taking
Speaker 2: at least one page out of your book last year.
Speaker 2: So as we're speaking a day out from the budget,
Speaker 2: what's the most urgent thing you'd like to see the
Speaker 2: Treasurer address on Tuesday night? And you know, maybe take
Speaker 2: another page out of your book.
Speaker 3: Look, I don't mean to reject the premise of your question.
Speaker 3: There are so many urgent problems in Australia. Support for
Speaker 3: women fleeing domestic violence is urgent, Indigenous health in regional
Speaker 3: areas is urgent. The need to tackle climate change is urgent.
Speaker 3: There are lots of things we need to do. So
Speaker 3: for me, what's urgent is for the government to say
Speaker 3: out loud that Australia is one of the richest countries
Speaker 3: in the world, that we live at the richest point
Speaker 3: in world history. And if we want to solve these problems,
Speaker 3: we can. But if we want to solve lots of problems,
Speaker 3: then we're going to have to do some big things differently.
Speaker 3: And Australia is one of the lowest tax countries in
Speaker 3: the world. That's a fact. Oe City website makes it clear.
Speaker 3: The PINCO lefties at the International Monetary Fund to make
Speaker 3: it clear. Australia is the third largest fossil fuel exporter
Speaker 3: in the world, but we collect more revenue from kids
Speaker 3: are paying their hex debt than we do from the
Speaker 3: gas industry paying petroleum resource for rent tax. We spend
Speaker 3: twelve billion dollars a year subsidizing the fossil fuel industry.
Speaker 3: We should not be subsidizing fossil fuel expansion in twenty
Speaker 3: twenty four. We should be subsidizing better health care, better education,
Speaker 3: better childcare, the role out of renewable energy. So we've
Speaker 3: got a kind of nineteen seventies budget even though we've
Speaker 3: got the problems of twenty twenty four, and until we
Speaker 3: change that, we'll get kind of stuck with well meaning
Speaker 3: people asking is it more important to invest in health
Speaker 3: or education. I don't know what about both. My favorite
Speaker 3: observation is in Norway they tax their oil industry and
Speaker 3: give university degrees to kids for free. In Australia, we
Speaker 3: subsidize our fossil fuel industry and charge our kids are
Speaker 3: fortune to go to UNI. That's why budgets matter. Budgets
Speaker 3: are about choices, and we need to urgently make big,
Speaker 3: better choices.
Speaker 2: So, Richard, I know it's not great to simplify the
Speaker 2: cost of living crisis, but I want to ask you
Speaker 2: about the legacy this is going to have on our country.
Speaker 2: So when we do finally exit this, is there a
Speaker 2: risk that if we don't get it right, some people
Speaker 2: are going to live with the consequences for longer than others.
Speaker 3: Absolutely, and that's already happening. We're already seeing this. And
Speaker 3: this is not just brutally unfair to people who were
Speaker 3: unlucky enough to know just finish UNI at this point
Speaker 3: in history. It's brutally unfair to people who've become homeless
Speaker 3: or had to flee their home from domestic violence at
Speaker 3: this point in history. This is the real pain of neoliberalism.
Speaker 3: This is the real danger of decades of treating everybody
Speaker 3: as you know, well, if you're poor, it's because you
Speaker 3: made bad choices. Austraya used to be the land of
Speaker 3: the sort of fair go. Now where the land of
Speaker 3: suck it up. You know, it's been decades of talk
Speaker 3: and we still haven't increased unemployment benefits. Child poverty in
Speaker 3: Australia is going up. But you know, for those earning
Speaker 3: over two hundred grand strap in lucky you you're about
Speaker 3: to get a four thousand dollars a year tax cut.
Speaker 3: That's proof that Australia is not making the big structural
Speaker 3: decisions that I think we need to make comma if
Speaker 3: we want to solve these kind of problems. And to
Speaker 3: be clear, maybe we don't. Like maybe I'm shagging a
Speaker 3: rock here, Maybe most Australians are happy watching income inequality
Speaker 3: get worse, greenhouse gas emissions go up, and social cohesion declient.
Speaker 3: Not the kind of country I'd like to live in.
Speaker 3: But it is a democracy and we do elect people
Speaker 3: to Parliament to make these decisions for us. And that's
Speaker 3: why we have to be careful not to think that
Speaker 3: there's this thing like a cost of living crisis that's
Speaker 3: like a cyclone that's buffeting your country. It's entirely imaginary.
Speaker 3: For people that own lots of houses and own lots
Speaker 3: of shares and earn lots of money, It's never been
Speaker 3: a better time to be really rich.
Speaker 2: Richard, thanks so much for your time.
Speaker 3: Thank you anytime.
Speaker 2: When Richard Sais thinks the government is starting to make
Speaker 2: those bigger changes when it comes to where our tax
Speaker 2: dollars go and what we choose to subsidize, Casey Chambers
Speaker 2: from anglic Care thinks that too, and she's also a
Speaker 2: little more optimistic that they might actually go through with it.
Speaker 1: We'd like to see the government start to and not
Speaker 1: just the government, but the government as leaders of our society,
Speaker 1: start to talk about the level of inequality we're willing
Speaker 1: to have. And I don't think most Australians are willing
Speaker 1: to have the level that we have, so we need
Speaker 1: to really work on it. We think that the government
Speaker 1: does have an interest in social cohesion and equality. The
Speaker 1: fact that they went back and remodeled the tax cuts,
Speaker 1: which we're going to be grossly unfair, it is a
Speaker 1: really good sign and it gives us hope and optimism
Speaker 1: that this government does have the spine to do it,
Speaker 1: and that the community has a desire to see that.
Speaker 5: Of course, we'll have to wait and see.
Speaker 2: Also in the news today, Australia's voted yes at the
Speaker 2: UN General Assembly along with one hundred and forty two
Speaker 2: other nations, on a resolution that Palestine is qualified to
Speaker 2: join the UN as a full member. That would give
Speaker 2: the Palestinian delegation more rights and privileges. At the moment,
Speaker 2: Palestinians have an ambassador at the UN with observer status
Speaker 2: as a non recognized state. Any official change to that
Speaker 2: would have to be granted by the fifteen member Security Council,
Speaker 2: where the US holds VETO powers, and the education ministers
Speaker 2: of five states have joined together to call on the
Speaker 2: Albanese government to do more to help them fund public
Speaker 2: schools in tuesday Nights budget. Under the current funding arrangements,
Speaker 2: the ACT is the only place where public schools are
Speaker 2: fully funded to the baseline school resourcing standard. I'm Ashlin McGee.
Speaker 2: This is seven am.
Speaker 3: Thanks for listening.
Speaker 2: We'll say you again tomorrow.