Think energy costs now, just wait for the carbon tax
A utilities representative recently came to my front door offering a better deal on our gas and electricity prices if we changed to a different supplier. He was offering a larger discount than the existing supplier.
The visit prompted me to look back at the cost of electricity over the past few years. The results were startling. Last year, the costs were more than 50 per cent higher than five years ago. Our usage was about the same.
The price increases are being felt by households across Australia. According to Australian Bureau of Statistics data, power bills increased by 50 per cent. In the same period, total expenses only increased by 16 per cent. Since Labor has been in government, the prices have risen by more than 42 per cent.
For people living in Sydney, power bills next year will cost almost $500 a year more than they would have if the share of spending on electricity had remained at 2006 levels. Currently Sydney residents are spending more on power than fruit and vegetables.
The story is the same elsewhere. In Melbourne, power and water bills are 45 to 60 per cent higher than five years ago. And gas is 20 per cent higher. This is up to six times higher than inflation over the same period.
At the same time, household savings have fallen. The share of debt-free households has fallen to 36.2 per cent, the lowest level since the Melbourne Institute of Economic Research commenced collecting the data in 2001.
A recent report by the Land Values Research Group found that the Australian housing market is over-valued by 45 per cent. This supports the findings of The Economist international house-price indicator, which found local housing a staggering 63 per cent over value in October.
Australian households are already suffering from these trends. If interest rates are increased by the Reserve Bank to counter inflationary pressures in the economy, as most financial commentators expect, it will have a pincer effect on many people.
In recent years, housing has become less affordable. Home ownership is being delayed, as is full home ownership. There has been a substantial increase in the spatial gap between the haves and the have-nots. Rental affordability has fallen significantly. In addition, water, sewerage, health and education costs have risen substantially.
At the same time, the Gillard government is continuing its massive expenditure, which is adding more pressure to interest rates.
If the current situation is concerning, the future is scary.
On top of these pressures, the Gillard-Brown Labor-Green Alliance proposes a new carbon tax that will force up the price of power, transport, and household items.
The Melbourne price comparator, GoSwitch, predicts that electricity prices will be as high as $10,000 a year for some households. The Energy Retailers have warned that “consumers are in the firing line from inevitable price rises.”
Labor’s other programs, such as the NBN and the Murray-Darling proposal, risk massive expenditure over-runs, adding further to the cost-of-living pressures on Australian families. This is without unexpected factors, such as widespread floods that could occur over the next few months.
Labor’s economic failures, coupled with its headlong rush to raise taxes, will leave more people struggling to make ends meet.
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