'Mortgage Bill' beats 'Electricity Bill' in cost-of-living war
By Stephen Koukoulas
Posted Mon 2 Dec 2013, 1:30pm AEDT
Photo: 'Mortgage Bill' Shorten should be well satisfied with savings due to the unprecedented low interest rate structure, achieved on the watch of the previous Labor government. (AAP: Alan Porritt)
In its attacks on 'Electricity Bill' Shorten, the government is ignoring the massive boost to incomes and cash flow from lower interest rates, and also many other items whose prices have fallen over recent years, writes Stephen Koukoulas.
It's no surprise that the Coalition has been ferocious in its attack on Labor about the impost on the cost of living from the price on carbon. The government reckons that Labor's decision to vote against the repeal of the carbon price will mean that the average Australian family will be $550 a year worse off.
The Coalition is tagging Opposition Leader Bill Shorten "Electricity Bill", suggesting he will take responsibility for the failure of electricity prices to fall if in fact it turns out that the repeal of the carbon tax is blocked in the Senate on the back of the Labor Party's position.
Whatever the true impact on electricity prices if or when the carbon tax is repealed, there are some important home truths about electricity and the cost of living that are often ignored.
For the average household, just 2.6 per cent of their expenditure on goods and services covered in the consumer price index basket, is on electricity. It simply is not a large part of the average household budget. The average household spends double that amount on take away food and meals out.
What is even more important in terms of cost of living is the enormous saving to mortgage holders and small business borrowings and overdrafts due to the fall in interest rates that occurred during the Labor Party's time in office.
Shortly after Labor took office at the end of 2007, the RBA hiked interest rates to the point where the standard variable mortgage rate was 9.6 per cent. The level of interest rates for the business sector was, on average, above 10 per cent.
Right now, mortgage rates are around 5.95 per cent, and less if you negotiate with your bank, and the business lending rate is around 7.0 per cent. These are close to record lows.
What this means for homeowners with an average $300,000 mortgage is a drop in annual interest on their loan of a thumping $11,000.
For the business sector, which has total bank debt of around $850 billion, the interest saving is around $30 billion a year.
"Mortgage Bill" Shorten should be well satisfied with this saving for borrowers because of the unprecedented low interest rate structure, achieved on the watch of the previous Labor government.
This quite massive reduction in the cost of borrowing via low interest rates frees up cash flow and provides a boost to spending, investment and jobs. Indeed, this low interest rate environment Australia is currently enjoying is one critical reason why the economy is in its 23rd year of growth without a recession and why the unemployment rate has remained below 6 per cent for more than a decade.
At this juncture, there is a critical point to note.
It is in no way asserted that the economic policy settings of the previous government alone accounted for all of the reduction in interest rates over the past 5 years. There were many other factors at play that saw the RBA cut interest rates to a record low, not least the global financial crisis.
But this is in much the same way it is completely wrong to suggest the sharp rise in electricity prices was due to the price on carbon. The carbon price accounts for about one-tenth of the rise in power costs over the past 5 years. The other 90 per cent of the price rises were due to other factors.
There is a range of other issues with the cost-of-living furphy surrounding electricity prices.
In the last three years, for example, a time when not only mortgage interest costs have fallen quite massively, average wages have risen by approximately 10 per cent.
In those three years, the price of food has increased by just 4.6 per cent; within that meat and seafood prices are down 0.7 per cent and dairy prices are down 5.8 per cent. Over those three years, clothes prices have fallen 2.2 per cent, furniture prices fell 3.5 per cent, household appliances fell 6.9 per cent, tools and garden equipment down 2.5 per cent, personal care products down 3.0 per cent, car prices down 7.3 per cent, audio, visual and computing equipment down 23.3 per cent, books down 3.8 per cent and sport and camping equipment down 10.1 per cent. And so it goes.
By focusing on electricity prices and honing their attack on the opposition leader by referring him to "Electricity Bill" Shorten, the government is ignoring not only the massive boost to incomes and cash flow from lower interest rates, but also many other items whose prices have fallen over recent years, factors that have swamped the relatively insignificant increase in electricity price attributable to the carbon price.
Stephen Koukoulas is a Research Fellow at Per Capita, a progressive think tank. Between October 2010 and July 2011, he was economic policy advisor to the Prime Minister Julia Gillard. View his full profile here ..http://www.abc.net.au/news/thedrum/stephen-koukoulas/2836682.
Tony Abbott's new year's resolution: disavow climate change extremist Maurice Newman Maurice Newman, chairman of the Abbott government's Business Advisory Council, and outspoken climate change denialist. To have any credibility on climate change, Tony Abbott must disavow his climate change denying business adviser Maurice Newman 31 December 2013 http://www.theguardian.com/environment/southern-crossroads/2014/jan/01/maurice-newman-tony-abbott-climate-change-denial [with comments]
Prime Minister Tony Abbott is under pressure to distance himself from Liberal Senator Cory Bernardi after the backbencher called for a new debate on abortion, railed against "non-traditional" families and called for more flexible industrial relations laws.
Senator Bernardi, a former parliamentary secretary to Mr Abbott, has made the controversial comments in his new book, The Conservative Revolution.
In his book, Senator Bernardi accuses some women of using abortion as "an abhorrent form of birth control" and branded those who advocate for abortion to be available as "pro-death".
He writes that the number of abortions performed each year in Australia by the "death industry" is "horrendous and unacceptable".
"The political pressure from the left has ushered us into a morbid new world. It is not enough to stop the trend. What is needed is a reversal back to sanity and reason."
Interviewed on ABC TV on Monday, Senator Bernardi stood by his book, and called for a fresh debate about abortion.
"The question is for everyone in this debate, where does life begin?" he said.
"For me it's at conception, for other people it is 24 week of gestation, others say it's not until the child is born and a sentient being, some weeks after birth.
"I haven't said we should outlaw or prohibit abortion, I have said there is a right-to-life issue we should be exploring."
In his book, the South Australian senator calls for the traditional family model to be restored to "prime position" over other family arrangements such as step families, same-sex and single families and couples with children born via surrogacy.
"Given the increasing number of 'non-traditional' families, there is a temptation to equate all family structures as being equal or relative," he writes.
"Why then the levels of criminality among boys and promiscuity among girls who are brought up in single-parent families, more often than not headed by a single mother?"
He writes that it is "perfectly reasonable and rational" for the state to "reinforce and entrench those aspects of traditional marriage that work, not undermine them and promote 'alternatives' which have led to social chaos".
Senator Bernardi also writes that government programs to assist disadvantaged children such as breakfast clubs undermine parental responsibility by fostering a mentality that the state would provide.
He said the diminished influence of religion in Australian society had left the country lacking direction.
"I believe that by stripping God and religious principles from our culture (and our politics) we have become a nation which does not know which port it is sailing to," Senator Bernardi writes.
But he identified Islam as a threat to the Western way of life, and also attacked what he called the "green agenda" which he said gave a greater value to plant and animal life than humanity.
Senator Bernardi also called for more flexible workplace laws, saying some parts of John Howard's WorkChoices laws deserve revisiting.
"Surely an employee should be free to negotiate an acceptable workplace agreement directly with their employer ... free from government or union interference," he writes.
"Small business needs to be empowered to hire and fire employees free of illegitimate government interference."
The comments are likely to prove an unwelcome distraction for Mr Abbott, who has sought to neutralise the issues of industrial relations and abortion.
During the 2010 and 2013 election campaigns Mr Abbott insisted WorkChoices was "dead, buried and cremated". And in 2013 Mr Abbott pledged the Coalition had no plans to change abortion laws after then prime minister Julia Gillard gave a speech warning "men in blue ties" would make abortion rights their "plaything" if the Coalition won power.
No stranger to controversy, Senator Bernardi was re-elected to the Senate in last year's election in the No.1 position on the Liberal Party's South Australian Senate ticket.
Senator Bernardi served as Mr Abbott's parliamentary secretary in opposition for more than two years, until he was demoted in 2012 for a speech in which he said sanctioning of same-sex marriage would lead to demands to legalise bestiality.
In 2010, Senator Bernardi called for a ban on wearing the burqua in public, and in 2011 he declared it was "wrong" for the government to pay the funeral expenses of asylum seekers who had drowned.
In December, Senator Bernardi issued a public ultimatum to Liberal frontbencher Malcolm Turnbull to either quit the ministry or stop publicly advocating for same-sex marriage.
Senator Bernardi said on Monday as a backbencher he was not bound by cabinet solidarity.
Labor frontbencher Anthony Albanese on Monday called on Mr Abbott to distance himself from Senator Bernardi's most latest remarks.
"There is nothing fair and nothing reasonable about these extremist remarks from Cory Bernardi."
"He says that he's pro-freedom, but he's against women's right to control their own bodies."
"He says he's pro-religion, but he's against any religion that isn't the same as his."
"He says he's pro-individual rights, but in his advocacy of WorkChoices, he would take us back to the Howard era that saw division in the workplace, that saw workers discriminated against, and rights being taken away."
Mr Albanese, who was raised by a single mother, said Senator Bernardi claimed to be pro-family, "but he's against any family that doesn't resemble his depiction of what a family is".
"This is an offensive contribution to the policy debate. He's a confidant of Tony Abbott, and it's up to senior Coalition figures to dissociate themselves, if in fact they disagree with Cory Bernardi."
Acting Greens leader Richard Di Natale, condemned Senator Bernardi for what he described as his "hateful and offensive" statements.
“Former Prime Minister John Howard was rightly criticised for his failure to condemn Pauline Hanson's hateful views and these views are just as abhorrent. They have no place in modern Australia, let alone in a mainstream political party and Tony Abbott must condemn them unequivocally," Senator Di Natale said in a statement.
“The concern for many Australians is that Tony Abbott and Cory Bernardi are cut from the same ideological cloth but that unlike the Prime Minister, Senator Bernardi is not trying to hide his views or disguise his brutal agenda.
“If Tony Abbott doesn't agree with his former Parliamentary Secretary and confidant then he should immediately condemn these statements. If Tony Abbott fails to clearly distance himself from Senator Bernardi then it will be impossible to escape the conclusion that he is quietly pleased that his dirty work is being done.
Abbott was forced to stand Bernardi down from his front bench position for his linking there of gay marriage and bestiality .. Abbott must clarify his position on Bernardi's most recent comments, just as he must on Maurice Newman's anti science views on climate change .. could the re-polished Abbott be a one term PM? .. yup, repeat, imo, odds are he could be .. Bernardi looks kinda anxiety ridden, for mine .. poor, threatened young fella, that he is .. sad, stuff .. lolol .. aside, i'd love to see Albanese lead Labor into the next election .. he lost to Bill Shorten in the leadership ballot after the Abbott victory September 7, 2013 ..
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