Chapter 1Introduction
1.1On 28 September 2022, the Senate established a select committee, to be known as the Select Committee on the Cost of Living (committee). The committee was appointed to inquire into and report on:
(a)the cost of living pressures facing Australians;
(b)the Government’s fiscal policy response to the cost of living;
(c)ways to ease cost of living pressures through the tax and transfer system;
(d)measures to ease the cost of living through the provision of Government services; and
(e)any other related matter.
Conduct of the inquiry
Submissions and public hearings
1.2The committee advertised the inquiry on its website and wrote to organisations and individuals inviting submissions by 15 March 2023. The committee subsequently agreed to extend the submission closing date to 12 May 2023.
1.3On 28 October 2022, the committee issued a media release inviting submissions that addressed its terms of reference.
1.4As of 2 May 2023, the committee had accepted and published 70 submissions, which are listed at Appendix 1.
1.5The committee held the following public hearings:
Sydney, New South Wales on 1 February 2023;
Melbourne, Victoria on 2 February 2023;
Brisbane, Queensland on 3 February 2023;
Box Hill, Victoria on 1 March 2023; and
Warwick Farm, New South Wales on 21 April 2023.
1.6A list of witnesses who appeared at the hearings is at Appendix 2.
Acknowledgements
1.7The committee thanks those individuals and organisations who made submissions and gave evidence at the public hearings.
Purpose of this report
1.8This report summarises evidence received by the committee, to-date. It focuses on three themes that were identified as priority areas on which the committee resolved to focus during its first five public hearings; namely, energy prices, housing, and food and groceries.
1.9This interim report does not present the committee's views or recommendations on these matters.
1.10The committee is due to table its final report by 30 November 2023.
Structure of report
1.11This report comprises 6 chapters:
Chapter 1 provides background information relating to the select committee and its inquiry;
Chapter 2 outlines the key dynamics driving cost of living pressures, and describes the monetary and fiscal responses to rising costs of living;
Chapter 3 details the experience of Australians and describes the impact of rising costs on the not-for-profit sector;
Chapter 4 provides an overview of Australia's energy system, outlines the dynamics underlying recent energy price fluctuations, describes the Government's market interventions, and presents evidence on proposed solutions to energy-related cost of living pressures;
Chapter 5 outlines the impact of interest rate rises and high rental prices on housing affordability, and sets out some of the proposed solutions to addressing housing affordability presented to the committee; and
Chapter 6 explores the drivers and the impacts of food and grocery price rises, outlines key dynamics impacting the food and grocery sector, discusses food insecurity and inequality in Australia, and lays out some of the evidence received by the committee on proposed solutions to cost of living pressures related to food and groceries.
Interim committee findings
Finding 1: Real wages are not growing and have deteriorated due to high inflation. Finding 2: The most effective way to reduce inflation is to have monetary policy and fiscal policy working in the same direction. Finding 3: While the cost of living in Australia is being driven by a range of factors, including supply shocks and adverse weather events, domestic policy settings are also major contributors to inflation. Finding 4: The cost of living crisis is causing an increase in the demand for services provided by the charitable and not-for-profit sector. Finding 5: As demand for charitable services increases, there is a parallel downturn in the ability of charities to meet this demand due to increased overheads for these organisations and lower levels of charitable giving. Finding 6: Energy prices have risen and are a major contributing factor to the cost of living crisis in all sectors of the economy. Finding 7: More supply of energy will reduce the cost of energy. Finding 8: Housing costs, both in terms of rental and mortgage costs, are a major contributing factor to the cost of living crisis. Finding 9: Greater supply and reforms to domestic policy settings are required to adequately address the need for additional housing, including community and social housing. Finding 10: The increasing cost of food and groceries are a major contributing factor to the cost of living crisis. Finding 11: Supply chain disruptions are a primary driver of increasing food and grocery prices. However, increased input costs to the production and provision of these goods, including energy and fuel, will impact the prices paid by consumers. |