Inconvenient truth about inflation in Australia

As Australia prepares for rampant inflation, we can’t just say this will all pass, all the while laying poor people on the sacrificial altar.

Inflation is the monster we forgot was real. We have now reached the point where an entire generation of Australians has never experienced the economic horrors of the 1970s and 1980s.

The Reserve Bank has rightly been bummed for not acting faster to deal with rising prices, but in a sense it has also become a victim of its own success. The RBA has managed to keep inflation within its target range of 2 to 3 percent for so long that it has almost forgotten to fail.

It has certainly remembered it now and the only real leverage left for rate hikes will be middle and working class Australia on the rack.

As a humble art student — education is one of the highest rising costs driving the CPI, by the way — I leave the arguments about what to do about it to the economists. Though I’ll also leave you with the old joke that if you put all the economists in the world end to end, they still wouldn’t come to a conclusion.

But I’m sure of one thing: we can’t just say that this will all pass and meanwhile put poor people on the sacrificial altar of macroeconomic theory.

One thing that’s obvious is that the theory hasn’t helped us all that well so far. Especially the idea of ​​lockdown loving Covid elimination activists that we could just pause the economy and then restart and everything would go back to normal.

Instead, the economy has revived with such gluttony that it is eating us alive, fueled in large part by skyrocketing housing costs caused by people who have resigned or are addicted to working from home and problems in the materials supply chain.

Meanwhile, Vladimir Putin’s frenzied Quixote War against the people of Ukraine has driven fossil fuel prices through the roof, leaving state and federal governments failing to do anything, frankly, about energy policy.

Despite our abundant resources of coal, gas, wind and solar energy, Australia has clearly not done enough to support the dirty but reliable base load power supply, nor installed enough clean energy infrastructure to replace it. We’re the definition of half pregnant and we’ve now been caught with our pants down.

Our new Labor government is acting swiftly and smartly on this, including this week’s emergency meeting of energy ministers – about 10 years late, but still… – and an immediate abolition of long-term climate problems in favor of the much more urgent problem of affordable energy for people here and now.

Rest assured, I’m still all-in on reaching net-zero by 2050 – that’s a pretty indelible matter from the public eye – but I definitely won’t tolerate the sacrifice of retirees and the working poor to get there. Beat for everyone, I say.

And so the only question, the eternal question, is what do we actually do?

For people on the minimum wage, I don’t see how you could deny a 5 percent raise. While it is true that it may add some inflationary pressures, the alternative is that they are backing off and most likely going under. And by all current projections, even 5 percent won’t be enough to keep pace.

But for people on benefits, the situation is even more dire. The $250 sugar hit they got in the last federal budget will be long gone by now. As welcome as it was, it would have evaporated the day it landed.

Labor could just give away more money in its forthcoming mini-budget, but doing so would give rise to the same – arguably credible – claims of inflationary pressures.

A better measure would certainly be to ease the electricity bill and increase and widen the concessions already provided for some. This could cut costs without putting consumers in a bind, certainly the whole point of the game.

Speaking of which, the banks need to close theirs. If interest rates for borrowers are forcibly raised, they should certainly raise rates for savers as well.

If we’re trying to keep inflation low, isn’t that a crucial element in giving people an incentive to save money instead of spending it?

Again, what do I know – I’m just a simple art student. But it seems to me that the same banks that used the last global financial crisis to claim they were good corporate citizens and not a bunch of jerks could use the current ones to actually prove it.

We all understand that there are major global forces at play here, many of which Australia has no control over. But we can control how they affect our most vulnerable and we can make sure no one is left behind.

Watch Joe on The Blame Game – Fridays 8.30pm on Sky News or stream anytime at

#Inconvenient #truth #inflation #Australia

Leave a Comment

Your email address will not be published. Required fields are marked *