For those following my Senate Estimates posts, it’s become clear that the Albanese Government is ‘stage managing’ the Estimates process to the point where getting answers has become nearly impossible. In early August, I was pleased to secure a new type of inquiry to supplement estimate questions, which will allow the Senate to call a department or agency for a brief session to have specific question/s answered.
The first agency to be called will be the Australian Bureau of Statistics (ABS). We’ll be asking how they compile the cost of living index, which is Australia’s official inflation index. This is a very important piece of data, as it decides wage increases for everyday Australians, interest rates, government bond yields and our exchange rate.
With many Australians questioning the accuracy of the official 3.8% inflation rate—feeling that inflation is actually worse—I am eager to get to the truth of what our inflation rate actually is.
Transcript
The actual rate of inflation—or, more accurately, the consumer price index—represents how much cost of living has changed in the previous quarter and over time. To measure the CPI change, the Australian Bureau of Statistics uses a basket of goods and services that should fairly represent the purchases an average Australian household would make. Incremental changes are made to the measure every few years to take into account changes in household spending patterns. After many years of adjustments, chops and changes, the question now arises: how relevant is the CPI calculation to the lives of working Australians?
Mortgages have become a massive expense, rising 45 per cent across the 12 interest rate rises that have occurred under the Anthony Albanese Labor government, yet housing is only 13 per cent of the inflation basket for households, no matter how high your mortgage or rent goes. In part, this is because the spending pattern that sets the weightings is taken from 2022, before Labor’s inflation actually set in. The weighting in the basket given to holidays and recreation has increased to 12.1 per cent. This is interesting, because holidays were really expensive during COVID and then, as the economy reopened, the cost came back down. Increasing the weighting for holidays has acted to reduce the inflation rate artificially. How accurate is that? Who can afford expensive holidays in the current cost-of-living crisis?
In creating a system that relies on spending patterns which may be years old or which fail to reflect the main demographic—working families—the ABS is failing to accurately reflect cost-of-living increases as households feel the pain right now. Governments can fudge the figures. Government subsidies on energy, for instance, reduce the inflation rate for energy, even though consumers are paying the full bill themselves either through their wages or through tax. Inflation should be expressed before government cover-up payments, not after.
One Nation will return to this topic next week on behalf of Australian working families.
