Why Is Australia So Expensive?

[icyfroth]

Recent months have brought the emergence of one of the perennials of economic debate in Australia — the lament that Australia is a high-cost place to do business.

Last week Scottish economist James Mirrlees declared that Australian wages needed to be closer to Chinese levels, or the government would have to subsidise them, in order for Australia to compete for international investment with China. That came after one of the annual winter rituals in Canberra, “Minerals Week”, in which the men (and woman) who run our mining companies flock together to collectively insist that Australian workers need to be more “flexible” and cheaper — though no one said aloud what many of them probably think, that Gina Rinehart’s idea of $2 a day was an appropriate benchmark.

But that’s just wages. The complaint extends more broadly. In May, the World Bank declared Australia to be one of the most expensive economies in the G20, and in March, KPMG revealed Australia was now the second-most expensive place in the world to do business. Both pointed to the strong dollar and the resources boom, which has lifted our national income. So who’s to blame for Australia being so expensive?

The dollar

The Aussie dollar has defied everyone, from the current and former government to the Reserve Bank, and now the plunge in global iron ore prices, which should have dragged it lower.

Real estate

We all know residential property in Sydney and Melbourne is very expensive — so much so that foreign commentators routinely predict the bursting of the Australian property bubble. But high prices are because of one basic thing: people in Sydney and Melbourne like it like that.

Electricity

Electricity prices have rocketed over the last decade as that industry has taken advantage of the flawed rules around pricing regulation to bloat their maintenance budgets.

Food and groceries

Despite persistently low inflation since 2008 — except when natural disasters intervene — Sydney and Melbourne are also in the top 10 cities in the world for expensive food and groceries. While we buy a lot of overseas food that costs more because of transport and foreign exchange costs, we also have farm-gate access to some of the world’s most efficient food producers, who insist they are struggling.

Financial advice

According to the Reserve Bank, Australia has higher costs in superannuation than many other Organisation for Economic Co-operation and Development countries, and retail superannuation clients face “considerably higher” fees than elsewhere.

But Wait There's More. Read Entire Article Here.

I found it very interesting and invite comment.

[2106greencat]

Sorry, just had another thought (2 thoughts  in under half an hour, a record for me!)

I think on the whole (please don't all jump on me, not saying everyone, but....) a hell of a lot of us have created a nation of 'wants'.

Years ago, before the computer, the games, the fancy cars, the huge houses, the OS holidays, the ..........we were a nation of 'needs'.

Being succesful and happy meant you provided your family with what they needed, now it seems unless you can provide your family with the latest of the best, you are not succesful or happy.

JMO and badly phrased, but you get my drift.

Life is after all what we make it

[the_great_she_elephant]

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@jimmy*part3 wrote:

That new oil reserve should help keep you from going Bloke.                                        

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I do hope so - I'm a bit old for a sex change..

(sorry Jimmy - I can resist everything except temptation.)

Seriously though, yes the new oil reserve will certainly help - and must be a godsend to Tony Abbott after he's just raised the exise; but I'm not sure that a cutthoat price war between the US and Saudi Arabia is ultimately going to be good for the global economy.

[jimmy*part4]

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@the_great_she_elephant wrote:

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@jimmy*part3 wrote:

That new oil reserve should help keep you from going Bloke.                                        

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I do hope so - I'm a bit old for a sex change..

(sorry Jimmy - I can resist everything except temptation.)

Seriously though, yes the new oil reserve will certainly help - and must be a godsend to Tony Abbott after he's just raised the exise; but I'm not sure that a cutthoat price war between the US and Saudi Arabia is ultimately going to be good for the global economy.

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I don't think it has anything to do with the US...it's Saudi Arabia fiddling with the prices. We buy oil from a few other countries and their economies may feel the pinch. They're under cutting them, not us. Although yes, we will buy it. And who wouldn't pay a cheaper price? It's much cheaper for them to just drill down into the sand, than most...of shore drilling, deep well drilling, etc. They can afford to cut their prices.

But then again...maybe I'm wrong. I don't follow much politics...it aggravates me!

Politics is like Brussel sprouts...it's good for you (to know), but tough to swallow.

BS stands for Brussel Sprouts!

[fourandsixpants]

to she-el who said:

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@jimmy*part3 wrote:

That new oil reserve should help keep you from going Bloke.

---

I do hope so - I'm a bit old for a sex change..

(sorry Jimmy - I can resist everything except temptation.)

Seriously though, yes the new oil reserve will certainly help - and must be a godsend to Tony Abbott after he's just raised the exise; but I'm not sure that a cutthoat price war between the US and Saudi Arabia is ultimately going to be good for the global economy.

 .........................................................................................................................................................................................................

It's a mite bit more complicated than just the US and Saudi Arabia....the Chinese are doing a 'big' deal with Qatar.....taking loads of Yuan in there for lots of oil......the price that the Chinese will get this oil for will have a major impact and repercussions on a few people.

China hopes to build a long-term, comprehensive and strategic relationship of energy cooperation with Qatar and strengthen bilateral cooperation in oil and gas exploration and development, liquefied national gas production and integrated cooperation in the petrochemical industry, Li (Chinese Premier ) said.

Tamim (Emir of Qatar) hailed the development of Qatar-China relations and pledged that Qatar will deepen bilateral ties and strengthen reciprocal cooperation and people-to-people exchanges.

He said Qatar will prioritize long-term energy cooperation with China.

http://www.chinadaily.com.cn/china/2014-11/05/content_18869482.htm

....then there's the Russian interests..................

Capitalism and competition serves the rich very nicely

[tcmsecretuseid]

Greencat, I agree with you. I told a friend(who was massively in debt years ago) that she needed to learn the difference between want and need. She didn't need to spend $200 getting her hair done. She didn't need to put a pool in her backyard. She didn't need to buy a new car every two years. She was constantly complaining about not having any money, yet she continued to buy herself jewelry, and other frivolous items.  She lost everything. Her house, her car, her jewelry, etc. 

We all do need to eat, and live somewhere though. Those costs have gone through the roof.

LOL, Jimmy. Brussel sprouts indeed. 

[cherry*135]

Tcm: " I do think your food prices are really expensive, as compared to many other places in the world."

Wage rates are high here. Plus 9.5% employer superannuation contributions,

$21p.h. For casual worker in a supermarket (retail, cafes..all hospitality job) that is the Mon -Fri rate, higher on weekend, $46.p.h. approx on a Public Holiday.

Food is very cheap (in AUD) in places like Slovenia, Malaysia......

[happyroo_bunji]

To buy an automatic CPAP machine here in Aust would set me back $2300.  To buy the exact same model from the US would cost $700AUD (including postage) all I need to make it work here is one of those adapter plugs which are approx $7.

The price difference of certain things is stupid, I can understand some difference but $1600? that is just nuts, and yet they wonder why people buy overseas

[cherry*135]

There are certainly high mark ups on good quality imported products in Australia.

That is changing slowly though for a lot of items, as consumers become aware of the price difference between Au prices and overseas prices.

Even the argument about about cost of shipping doesn't wash now, because a lot of the products are made in Indonesia or Asia which is fairly close to Aust.

Family member bought a pair of shoes from the US online. Made in Vietnam, sold in the US by brand name store, sent to customer in Australia. Online cost from US a lot lower than from store in Aust.