Ambit Interest Rate Rises and Private Health Rebate Cuts…What Sort Of A Ship Does Gillard Really Run?

Tonight I want to talk about cost of living issues (I know Newspoll is out soon, and there are other issues to cover). But speaking generally, and with the cost of living in this country rocketing, it would be cheaper to live in England. And that is some achievement, perverse as it is.

Does anyone doubt it? The UK is a notoriously expensive place to live, but the way things are headed, Australians would be financially better off by making the move to the Old Dart.

At least with the dollar buying 68p in the pound at time of writing, the conversion wouldn’t hurt too much.

There are two developments in the past few days that have triggered my sentiment, but stacks of others that have been building and building, to the point one huge question needs to be asked of the Labor Party and its government, headed by Julia Gillard.

As a free marketeer of lifelong tenure, I have already opined (reluctantly) that it may very well be time to hit the banks to impose the corporate responsibility on them that they refuse to undertake themselves: to slug them with a Windfall Profits Tax of 50% on anything above $2 billion they post in profit each year.

It’s at the point that it is past a joke: as was pointed out on 3AW by Neil Mitchell this morning, in the past five years the cumulative nett annual profits of the big four banks have increased from $16 billion to $24 billion.

At the same time, in an environment of soaring bank fees and charges and of mostly falling interest rates, the banks now seek to act as mini-RBAs by setting their own interest rates independently of the Reserve Bank.

Here’s the rub: if “funding costs” are so tight, why have their profits increased by 50%?

And if profits are so solid, why the need to start sacking thousands of staff?

Treasurer Wayne Swan, in his creditably stern public utterances on this matter, is clearly as effective as a wet mop; the results — banks slugging their customers to high heaven and sacking thousands of staff, whilst recording stratospheric profits — are there for all to see.

Wayne Swan has no influence or authority over the banks whatsoever.

We move on.

Julia Gillard’s Labor government is now moving (not for the first time) to means test the private health insurance rebate; the levels at which the clawback commences, in round terms, are $83,000 per annum in income for singles and $159,000 for couples and families.

What don’t these people get?

I’m the first to acknowledge that there are thousands and thousands of people who fall below those thresholds, who struggle and manage to make ends meet (and indeed, as at today’s date, my wife and I represent one such family unit).

But the simple fact is that those thresholds do not denote “rich” people; in 2012, they mostly denote struggling tradespeople, managers and professionals trying to achieve a better standard of life.

And this government seeks to clobber them for it.

But the kicker is this: the health care rebate is going to be progressively withdrawn from people/couples at those income levels, and for those people who refuse to maintain or take out private health insurance, they will receive a Medicare surcharge slug.

And the problem with that is that for all the money the Gillard government might save on the health insurance rebate, it will pay out tenfold on the creaking burden that will befall Medicare when hundreds of thousands of private health insurance policies are abandoned in favour of claiming what tax dollars have been extracted to pay for.

In my household, the bill for private health insurance is about $2,600 per year, on top of the 1.4% of our incomes that the government takes as a Medicare surcharge.

The changes to the private health insurance rebate won’t even recoup that from most of the people it affects, but it will cost a damned side more in Medicare expenditure.

It’s a mighty big price for a government claiming to want to return the federal budget to surplus to pay.

I’d say it’s actually a good old-fashioned Labor/Socialist hit at those the ALP and their Communist Green mates think can afford to pay; what it really is is just a grab for tax dollars, and bugger the cost.

Again, we move on.

The imbecilic decision by the Labor government under Kevin Rudd’s leadership to allow non-residents from foreign countries to purchase Australian real estate has directly worsened the crisis in housing affordability in this country.

That decision has never been reversed; and as a result, houses owned by foreign nationals across Australia stand empty (and appreciating in value by virtue of the diminished availability of housing stock) whist AUSTRALIAN CITIZENS are unable to buy houses in their own country.

This policy must be immediately rescinded. Go to China as a non-resident and an Australian citizen, and see how welcome you are to buy property.

And if anyone thinks I’m being racist, go to the UK, the US, and Canada too: you might get to make the purchase, but you’ll have to jump through so many hoops to do so as to have whiplash by the time you sign the contract. If you still want to.

And in a related vein, foreign interests are now not only buying prime Australian agricultural land, but taking its harvests and slaughters offshore to process, and then reselling our own produce to us at ridiculous mark-up. It is a syndrome that has taken hold under the present government’s revised foreign ownership rules.

Can anyone spot what is wrong with this picture?

Again, we move on.

With the Australian dollar roughly 15% above its peak immediately prior to the so-called Global Financial Crisis, and the price of oil roughly 40% below its level at the same time, is anybody able to adequately explain why the price of petroleum products in Australia are, broadly, the same as they were at those pre-GFC highs?

Much has been made in the past few days in the mainstream press about a need to sack the Commissioner for petrol prices, and I must say that I agree.

But Australia’s Trades Practices legislation is woeful: in this area, all that is ever “discovered” is that there is no collusive behaviour between oil companies to drive and/or keep the price of petrol high.

Of course there isn’t! These companies aren’t stupid; no oil company is going to be naive enough to commit a syllable to paper on price collusion.

Yet some years ago, near the end of the tenure of the Howard government, the ACCC announced that it would be “looking at” oil companies and petrol prices; for a couple of weeks the price a the bowser fell by 20 cents per litre — and once the heat was perceived to be off, back up it went.

Yet again, we move on.

Let’s not forget the entrenchment of the supermarket duopoly, its lack of competition and its crippling of consumer choice; indeed, it’s fair to say that half the reason petroleum products are as dear as they are is because two retailers now control nearly 80% of that market.

And Coles and Woolworths now want to start operating in the retail pharmacy sphere? Spare me.

We haven’t even gotten to electricity and gas prices — largely (but not entirely) the purvey of state governments — but my thoughts on those are much the same as my thoughts on the banks.

Sheer and utter usury.

Against the backdrop of all of this, we have the ALP’s carbon tax, which (“compensation” notwithstanding) will be a nett burden to consumers; its mining tax, which will render the country’s minerals and energy sector uncompetitive by international standards; and the slavish adherence by Treasure Wayne Swan to return the federal budget to surplus this year, motivated by no other trigger than political expediency.

And that, my friends, means more budget cuts — but cuts aimed at people trying to get ahead, as opposed to those content to bludge and sponge off the system.

And it also sits against a backdrop of a government wages policy whose design might be well-enough intentioned, but whose practical effect is to drive wages down and to empower unions over workers and employers, and to remove incentive for workers to work, or for employers to be remotely flexible.

All of this (and other factors I’m just about out of space to include) adds up to one big reality, and it’s this.

Unless you’re earning $250,000 per year, Australia is now one of the most expensive places in the world in which to live.

The Rudd/Gillard government has presided over the single greatest deterioration in living affordability in Australia since Federation.

And the “one huge question” I alluded to, at the commencement of this article, is a simple one.

Having presided over such a massive deterioration in living standards in this country, and having reduced both the disposable incomes and the prospects for Australians to advance themselves, and having saddled the country with hundreds of billions of dollars in debt and a fundamentally directionless policy agenda, what does the Gillard government propose to do about it?

I’d wager…nothing.

It’d be cheaper to live in England; not an unattractive prospect, but I would prefer to live in Melbourne, and in Australia generally.

But in four years of Labor government, it has become so expensive to live in Australia that so many people and families, who once could pay their bills and save, now struggle weekly to make ends meet.

What do you think?