Economics
Essential on living costs – and other matters
The latest Essential poll has some questions about living costs, and others on civic engagement. Unfortunately in terms of survey design they aren’t all up to Essential’s usual high standards.
Living costs
There are three sets of questions on living costs.
The first set is about people’s ability to afford expenses. Some questions are on childcare, utilities, and mortgages, where averages, as revealed in the answers, don’t tell us much. Also the questions are not independent: if one is facing an increased difficulty in paying mortgage costs one is probably also having trouble paying for food. The only revelation in this set of questions is that people over 55 are finding it easier to pay for gasoline and food than younger people – but then they probably don’t have so many kids to feed and drive to soccer.
The second is not a set but a single question: “How much difference do you think the federal government could make to the rising cost of living?”. In response 71 percent believe the government could do “a lot” or “a fair amount”. It is about what people believe the government could do: it’s not about blaming the government for current cost-of-living problems.
Without a timeframe in the question it provides no guidance for public policy. In the short run the government can do very little because any fiscal move could be offset by a move in the opposite direction by the RBA. But in the long run there is a great deal the government can do to lift productivity. It would be informative if Essential could run such a survey again, but with qualifications such as “immediately?” or “as it frames next year’s budget?”.
The third set is about government measures to deal with the cost of living. In sum, most people are calling for a government that’s much more inclined to spend and regulate (even though 52 percent believe the government should cut income taxes).
Even though they want taxes cut, respondents seem to be to the “left” of the Albanese government on economic policy, but that doesn’t mean they are guided by some consistent “left” or “green” agenda. For example there is strong support for cutting fuel excise tax: even 82 percent of Greens voters think it should be cut. How many Australians realize we have some of the lowest gasoline prices of all “developed” countries?
There is a separate question on what people think should be done with the $19 billion budget surplus. A quarter of respondents say it shouldn’t be spent, while almost another quarter want to see it spent on social housing.
Civic engagement
Respondents are asked if they have done certain things in the last 12 months – donated to a charity, been a volunteer, been part of a sporting team, or attended a public meeting. Apart from the last, all these questions are vague (donating a $2 coin to a Salvo doorknocker or $2000 to a charity?). But on all dimensions young people seem to be more engaged in civic activities than older people. It is revealing that Coalition voters, who are inclined to assert that charitable giving is more just and effective than taxation, are less likely to give to charity than Labor voters.
There is also a set of questions on people’s beliefs about others: are people “generally well-intentioned”; “do we do better when we work together rather than on our own?” It’s hard to draw much from responses to such questions, but at least they reveal that we aren’t a nation of jerks.
Childcare
Childcare prices have risen faster than inflation over the past four years.
That’s the main finding in the ACCC Interim report into child care.
According to the ACCC’s survey, location and availability are the main factors parents consider when choosing childcare (about 70 percent of respondents). Fees are also important (about 50 percent of respondents). The availability of education opportunities is important (about 40 percent of respondents) for users of centre-based care, but less so for users of family day care.
The child care subsidy is subject to an hourly rate cap. If a provider charges a fee that is at or below the cap, the parents’ subsidy is a percentage of the fee charged. If the fee is above the cap, the subsidy is a percentage of the cap: parents must meet the full amount they are charged over the cap as well as the co-payment.
Around 22 percent of centre-based care services and about 42 percent of family day care services charge above the cap. Charging above the cap has increased significantly since 2018, but the government bears most of the cost of this increase in fees: the government subsidy per child has risen from around $6000 to $7500 over four years.
The ACCC finds that fees have risen faster than wages – a surprising finding in an industry that’s very labour intensive. Fees charged by for-profit centre-based care providers are a little higher than fees charged by not-for-profits. Fees charged by for-profit in-home services, however, are much higher than those charged by not-for-profits.
The ACCC also finds that there has been a substantial increase in the number of children aged 0 to 5 enrolled in childcare (from 53 percent in 2018 to 70 percent in 2022), but the hours child care is used have not risen at the same rate. The ACCC explains the difference:
The number of charged hours per child enrolled in childcare, particularly for centre based day care, has been increasing. However, actual hours of attendance (how much of the enrolled time a child spent in care) has remained stable or fallen (for outside school hours care). This suggests that households are paying for more enrolled hours, but not always using them. We note that this may reflect the value households place in having the flexibility of being able to use differing amounts of childcare or particular start and finish times within a broad range to suit their needs on a day-to-day basis. The ACCC will investigate this further for our next report.
The ACCC’s report is informative in terms of providing data on prices charged, the burden on families according to their means, and locational disadvantage, but it is light on analysis. Why have fees risen so quickly? Is rent an issue – are building owners making excess profits from child care? Are insurance companies over-charging childcare providers?
The Grattan Institute has a short summary of the report: Why competition isn’t enough to deliver cheaper childcare. While there is some evidence that a greater density of child care in any region is associated with lower prices, the effect is weak. The Grattan Institute’s statement is a mild reminder to the ACCC that price competition, in itself, is not always the most effective way to overcome consumer disadvantage.
Workers’ rights
The International Trade Union Confederation has published its 2023 Global Rights Index. It presents a number of time series showing that worldwide, workers’ rights have weakened in recent years – the right to strike, the right to bargain collectively, the right of workers to join a trade union, access to justice, and general rights to free speech and assembly.
Its emphasis is on the worst offenders – Belarus, Bangladesh, Ecuador, Egypt, Eswatini, Guatemala, Myanmar, the Philippines, Tunisia and Turkey. Only the Nordic countries, Ireland, Germany, Austria, Slovenia and Italy get top marks.
It also lists a number of companies which it alleges have violated workers’ rights. Qantas is on the list, as is Apple in relation to its Australian operations.
It is notable that Turkey and Bangladesh are two countries from which Australia imports a large amount of clothing.
Cracked capitalism
Peter Sainsbury has sent this quote from Quinn Slobodian in The Internationalist Newsletter:
The secret of capitalism’s durability is one that thinkers like Friedrich Hayek understood well: its anonymity. Capitalism thrives under the illusion that the world’s inequalities are natural outcomes uncoordinated by any centralized authorities. It is an ideology that leads us to believe that the market’s uneven rewards are the outcome of a combination of our own hard work (or sloth), our own natural ability (or lack) along with some measure of good fortune. This is a recipe for permanent global gaps in the exposure to early death but also a remarkably open matrix onto which people project all kinds of supplementary ideologies whether religious, astrological, racial, cultural, or national. Capitalism tells us that things are the way they are because we earned them—with the parameters of that “we” always shifting according to circumstance. The real message of the Cold War and its denouement was not that capitalism had provided a better standard of living than communism as much as the fact that it had been better at hiding the face of the perpetrators of injustice.
This was in a review of Quinn Slobodian’s book Crack-up capitalism: market radicals and the dream of a world without democracy. The Internationalist Newsletter is not available online, but there is another review in The Guardian by William Davies: Crack-Up Capitalism by Quinn Slobodian review – zoning out. The model of capitalism promoted by the libertarian right finds democracy to be an impediment to its progress because it is in conflict with the natural and self-evident rules of the market.