Dissenting report by the Australian Greens

1.1The hearings have confirmed that the increasing cost of living has accelerated economic inequality and inflicted harm on many Australians. As noted in the Chair’s report, people are struggling to cover the basics of life, such as housing, health and food. This has increased demand on the charity sector and social services.

1.2This is the logical conclusion of decades of policy decisions that have eroded the basic tenets of economic equality. Continued attacks on workers' power, the kneecapping of the social security safety net, and the privatisation of services has destroyed the basics of economic equality.

1.3The unaffordability of housing, both from buying into the market and in meeting rental costs has been noted throughout the inquiry. Successive governments have implemented a housing strategy that incentivises buying into housing as an investment tool rather than a basic right.

1.4This has primarily been driven through the dual policy of tax concessions in the capital gains tax discount and negative gearing. Efforts to shift renters into the market have broadly failed as policies such as the first homeowners grant fuelled demand in the private market, increasing prices rather than reducing.

We do not need any more policies which actually operate in a market environment to drive up prices. Things like discounts on stamp duty do not help. Things like first homeowner grants do not help. In our view—I don't know whether you're aware, Senator—we don't support the discount on capital gains, because that also fuels behaviour in investment in the private market, which does not help to stimulate the right kind of supply. [1]

1.5This has been compounded by bank regulation skewed in favour of housing, and a continuing failure to invest in social and affordable housing. As it stands, there is currently a shortfall of 659000 social and affordable homes.[2]

1.6Successive interest rate increases by the RBA have been an inadequate pathway to deal with the cost of living. Monetary policy as used by the RBA is a blunt instrument that prioritises reducing inflation by smashing debt holders. As noted by Dr Marion Kohler from the RBA.

[The Reserve Bank's] mandate is to manage aggregate inflation…We have one tool, which is the interest rate, and it is a blunt tool. The RBA board is mindful of that and is looking at [affordability and cost of living] issues when setting policy, but it doesn't really have tools beyond the interest rate to address it. So there are trade-offs that we need to make. We just don't have the right tools to hit all those targets.[3]

1.7This inherently affects those with the least wealth, while benefits those with the most. This distribution was also referred to by Dr Kohler.

While those relying on interest income, such as self-funded retirees, have seen their incomes boosted by higher interest rates over the past year, those with mortgages will be feeling the effects of the rise in interest rates.[4]

1.8Raising interest rates has not adequately dealt with the core challenge of inflation as it does not directly address increases in corporate profiteering and other supply-side issues. Research from the Centre for Future Work indicates excess corporate profits have accounted for 69 per cent of additional inflation beyond the RBA’s target since 2019.[5] Currently, corporate profits have reached the highest ever share of GDP at 29 per cent.[6]

1.9Despite benefits flowing to corporate profits, wages have continued to decline, with real wages now currently reflecting what they were in 2009.[7] This is a significant factor of the current cost of living crisis as wages are the primary means of income for the majority of Australians. As noted by Ms Casey from Foodbank, a job is no longer a shield against the cost of living crisis. From Foodbank 54 per cent of food insecure households in Australia have someone in paid work.[8]

1.10This is the natural conclusion of interventions in industrial relations policy have attacked workers power, eroding their capacity to bargain for higher wages. Partnered with the proliferation of insecure work, Australian workers are not reaping the benefits of productivity gains in the economy.

1.11The income support system that serves as our safety net has been neglected to the point of dysfunction. A continuing failure to increase income support payments, particularly the rate of Jobseeker has kept Australians in poverty, exacerbating the cost of living crisis.

1.12Neglected by the Chair’s report is the reality that the current crisis has not emerged overnight, or as the consequence of an election cycle. The increasing cost of living pressures are the result of conscious policy decisions made by Governments disinterested in fortifying economic equality and maintaining strong safety net in Australia.

Senator Penny Allman

Deputy ChairSenator for Queensland

Footnotes

[1]Dr Cassandra Goldie, Chief Executive Officer, Australian Council of Social Service, CommitteeHansard, 1 February 2023, p. 47.

[2]Ryan van den Nouwelant, Laurence Troy and Balamurugan Soundararaj, ‘Quantifying Australia’s unmet housing need, a national snapshot’, Community Housing Industry Association, November 2022.

[3]Dr Marion Kohler, Head of Economic Analysis Department, Reserve Bank of Australia, Committee Hansard, 1 February 2023, p. 17.

[4]Dr Marion Kohler, Head of Economic Analysis Department, Reserve Bank of Australia, Committee Hansard, 1 February 2023, p. 10.

[5]Dr Jim Stanford, ‘Profit-Price Spiral: The Truth Behind Australia’s Inflation’, Centre for Future Work, February 2023.

[6]Greg Jericho and Dr Jim Stanford, ‘Profits and Inflation in Mining and Non-Mining Sectors’, Centre for Future Work, April 2023.

[7]Greg Jericho, Policy Director, Centre for Future Work, Australia Institute, Committee Hansard, 3February 2023, p. 17.

[8]Brianna Casey, Chief Executive Officer, Foodbank, Committee Hansard, 1 February 2023, p. 35.