First, the good news. Wages in the private sector have grown by the fastest rate in 10 years, according to data from the Australian Bureau of Statistics released this week. Private-sector wages, including bonuses, are up 3.1 per cent over the past year.
But the bad news outweighs the good. Inflation is running at 6.1 per cent and so “real” wages, after accounting for inflation, have dropped by their largest amount on record.
Australians just experienced the biggest drop in their living standards, yet over the past week we are obsessed with Scott Morrison’s ministerial reshuffles.
Perhaps because he has no answers to the cost-of-living crisis, the new Prime Minister won the hyperbole award and ridiculously claimed that Scott Morrison’s self-appointment to various ministries amounted to a “trashing of democracy”. News to Albo: We just had a democratic election that you won!
At least the Treasurer Jim Chalmers is trying to provide some answers. He claims that the government’s upcoming Jobs and Skills Summit will boost wages and productivity. Yet a lack of jobs is not the problem. Ask any business. Their biggest problem right now is vacant jobs with no applicants.
The labour shortage is starting to push wages up, as demonstrated by this week’s data. The bigger challenge is how to get inflation down so these overdue increases in your pay packet are not gobbled up by higher food and energy prices.
The record inflation result last month was in large part driven by higher food, energy and building costs. These cost increases are unlikely to slow soon.
In September, petrol prices will increase by 22 cents a litre when the fuel excise relief ends. And electricity bills will soon soar due to the over investment in renewable energy that nearly caused our lights to go out this winter.
How do we bring down the costs of food, energy and building things? You bring down the price by increasing the supply. In a country blessed with natural resources we can do that.
However, the new government seems beholden to a green agenda that subscribes to the BANANA principle – Build Absolutely Nothing Anywhere Near Anything.
Later this year Australia’s last urea plant – in Brisbane – will shut. Urea is the most important fertiliser used to grow our food and is made from natural gas. Because of Australia’s nonsensical fracking bans it has become too costly to make in eastern Australia.
A Perth-based company wants to build a new urea plant in Western Australia using the abundant natural gas there.
However, the new Labor government is threatening to scuttle their plans based on pressure from environmental and Indigenous groups.
Unless we build a new urea plant soon, Australia will be completely reliant on overseas supplies of fertiliser, the price of which has been skyrocketing and that will flow through to your grocery bills. This week, the new government released its plans for a new carbon tax, or to use its official, Orwellian title, a “safeguard mechanism”.
This new tax will force more than 200 Australian businesses from coalmines, to gas facilities, to steelworks, to buy carbon credits. This will further push up the price of energy and the cost of building homes in Australia.
The only way to deliver real wage increases over time is to increase our productivity. If we make more there will be more to pay workers. Putting on extra taxes, costs and red tape will make us poorer and lower wages for all. I wish the new government all the best with its jobs summit, but we desperately need a “production” summit that takes action to make and build things in Australia again.