Some supporters of the carbon tax have rubbished claims that people can’t afford to pay more for power and other goods. One widely circulated blog post bellowed, “Let’s get one thing very clear. Australians, en masse, are enjoying a better standard of living than has ever been enjoyed in this country’s history…” But the evidence shows otherwise.
Tony Abbott’s campaign against the tax is a staggering piece of hypocrisy. After all he was part of the government that brought us the GST and WorkChoices—both savage attacks on living standards.
But when he points to the rising cost of living he is not simply taping into greed or a misplaced sense of entitlement amongst the population.
Financial journalist Adam Scwab wrote earlier this year, “Rising assets prices, higher food costs, skyrocketing utility costs and increased education expenses have turned Sydney, Perth and Melbourne into three of the world’s most expensive cities. Economic statistics have created a mirage a wealth. People feel richer but in reality, they can afford less.”
The rising cost of housing is one example. As he notes, “Australians are now dedicating a record proportion of their disposable income to servicing their mortgages”.
But those who can afford a mortgage are the lucky ones. The rising cost of housing means that, apart from those who bought housing decades ago when prices were lower, many will struggle to afford their own home. “According to the ABS, less than 7 per cent of homes are deemed ‘affordable’ to low-income earners.”
The official inflation rate is often cited as the most important indicator of cost of living increases. But as economist Peter Martin wrote in the Sydney Morning Herald in May, “Most Australians face a faster cost of living rise than the official rate of 3.3 per cent.
“The increase facing working families is 4.9 per cent, the increase facing age pension households is 4.1 per cent, and the increase facing Australians on welfare is 5.1 per cent, according to living cost indices published yesterday by the Bureau of Statistics.” That is well above the rate of most pay rises. Since then inflation has risen to 3.6 per cent.
Statistics may show average incomes rising—but too much of the growth is going into the pockets of the rich. According to last year’s ABS report Measures of Australia’s Progress, between 1995 and 2008 the top 20 per cent increased their share of income earned from 37.8 to 39.4 per cent. At the same time the bottom 20 per cent went backwards, their share of income falling form 7.9 to 7.6 per cent.
Price increases from the initial carbon tax will be small. A carbon price of $23 a tonne is expected to cost households only $10 a week on average.
The Gillard government is gambling that the compensation for households contained in the package will ensure people are not out of pocket. But John Howard’s modeling for the GST said the same thing, and there were still pensioners who were worse off.
The fact is that the cost of living generally is on the rise. Many people are going to blame the carbon tax for these price rises, whether it causes them all or not. This means demands for ordinary people to pay higher prices, as the cost of action on climate change, are both callous and politically stupid.
They, like the carbon tax itself, undermine support for the kind of serious action on climate change that still needs to be fought for. All they do is help Tony Abbott.