“As the commodity boom and China’s growth slows, Australia will face a more challenging time ahead”: The director of the centre for economic performance at the London School of Economics, John Van Reenen. Photo: Anthony Johnson
Australians are living in the most expensive G20 economy in the world. A study by the World Bank shows the costs of goods and services in Australia are elevated around the levels of pricey European countries Switzerland, Norway, Denmark and Sweden.
Overall, Australia ranks as the fourth most expensive economy out of 177 countries measured by the price level index (PLI). It takes into account people’s purchasing power and a country’s exchange rate.
Economists believe the major factors that have pushed up local prices are the mining boom, high exchange rate, unbroken economic growth for 22 years, oligopolistic major industries, relatively low unemployment and high labour costs for business.
The lowest paid full-time workers in Australia earn an hourly minimum wage of $16.37, compared with $US7.25 ($7.75) in the US. Photo: Erin Jonasson
Kenneth Rogoff, professor of economics at Harvard University, said rich countries were typically at the higher end of the scale and poor countries at the low end.
“In the case of Australia, the high PPP [purchasing power parities] price level mainly reflects the way high commodity prices bid up economy wide wages and therefore the price of goods in the service sector,” Professor Rogoff said. “If high prices reflect high wages driven by productivity gains in the traded goods sector, then they are not such a problem.”
Productivity down
The Productivity Commission chairman, Peter Harris, warned last week that our productivity has “fallen well behind that of most other developed economies for more than a decade”.
He called for policy attention because the recent record terms of trade – export prices relative to import prices – will no longer support continued income growth for Australians.
Multifactor productivity, which measures how efficiently labour and capital are contributing to output, declined an average of 0.6 per cent annually over the past five years.
Australia’s annual minimum wage is the highest in the developed world, OECD data shows. The $US29,982 ($32,039) real minimum annual wage in 2013 compares with $US23,127 in New Zealand, $US20,285 in Canada, $US19,674 in the United Kingdom and $US14,978 in the United States.
Per hour, it is in line with the highly regulated labour market of France in purchasing power parity terms, a point highlighted by the federal government’s Commission of Audit. The Abbott government has ruled out the commission’s recommendation to slash the minimum wage.
The lowest paid full-time workers in Australia earn an hourly minimum wage of $16.37, compared with $US7.25 ($7.75) in the US. President Barack Obama is trying to lift the minimum wage to $US10.10, but Republicans in Congress have blocked the plan.
Expensive by international standards
The World Bank report, published last week and drawing on 2011 data, adds to evidence that Australia is expensive by international standards.
The Economist Intelligence Unit’s worldwide cost of living survey published in January found Sydney and Melbourne were more expensive than New York and London and among the top 10 most expensive cities in the world. They ranked fifth and equal sixth, behind Singapore, Paris, Oslo and Zurich.
The World Bank analysis shows that with the exception of Bermuda, the most expensive economies are in the Eurostat-OECD region.
Switzerland, Norway and Bermuda head the PLI with indices of 209.6, 206.4 and 201.6. Australia was just behind at 201.0, ahead of fifth placed Denmark at 185.0 and sixth-ranked Sweden scoring 175.1.
The lowest prices are in Africa, Asia and the Pacific, where PLIs range between 35 and 45 for countries such as Egypt, Pakistan, Myanmar, Ethiopia Bangladesh, India and Vietnam.
The director of the centre for economic performance at the London School of Economics, John Van Reenen, said high prices partly reflected that people want to live in economically successful Australia.
“However, as the commodity boom and China’s growth slows, Australia will face a more challenging time ahead,” Professor Van Reenen said.
The data was buried in the Purchasing Power Parities and Real Expenditures of World Economies report released last week by the World Bank’s International Comparison Program.
The report initially captured major attention for its finding that China had already overtaken the US as the world’s biggest economy. The Chinese government has tried to play down the significance of the report.
--- Gough Whitlam was a giant of the Australian progressive movement .. he introduced free university education, as Germany has again recently .. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=107307433 .. he introduced Australia’s national health insurance scheme .. I believe he was the first Western leader to take a delegation to China .. http://www.afr.com/p/lifestyle/review/whitlam_china_masterstroke_7rfoUh2Upmy0kZb9oyzJxN .. Gough Whitlam was not perfect, hell he was human, but he achieved much, and that is acknowledged today in Australia even by politicians who had po9litical differences with him back then .. http://www.whitlam.org/gough_whitlam/achievements .. and even though, again today, his commitment and achievements to better the lives of Australians is under attack (see previous: "The end of Medicare as we know it" .. his progressive legacy will forever endure.. lol, early in the interview just below Gough gives testament to his intellectual courage, honesty and integrity, and to his 'never run from a good argument(fight)' position .. i KNOW all here here would see in the video much relevance to politics in all countries .. particularly relevant here is his quite considerable criticism of some American policies and methods back when .. oh, also he has much to say on Radio Free Europe, on Radio Australia and lolol, on colonial established borders .. if you watch it i know you will enjoy it, so please consider .. seriously .. :) .. oops, almost forgot, Gough also comments on the existence and consequences of unfair electoral systems, on the Thatcher government's support of South Africa apartheid, AND on the Israel/PLO situation which, of course, still does have relevance today .. i hope i have piqued enough curiosities enough .. lol .. please enjoy ..
Gough Whitlam Interview (11/11/85)
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Prime minister for just three years, he brought in sweeping changes that transformed Australia and inspired a generation of progressive politicians
Lenore Taylor, political editor theguardian.com, Monday 20 October 2014 17.14 EDT Jump to comments (367)
Gough Whitlam in 2008 at the launch in Sydney of a biography about him, A Moment in History. Photograph: Hulton Archive/Getty Images
Gough Whitlam, who was prime minister for just three years but became a defining political figure of modern Australia, has died aged 98.
Whitlam’s family said in a statement on Tuesday: “Our father, Gough Whitlam, has died this morning at the age of 98.”
“A loving and generous father, he was a source of inspiration to us and our families and for millions of Australians.
“There will be a private cremation and a public memorial service.”
The election of his government on 2 December 1972, with the famous “It’s time” election campaign .. https://www.youtube.com/watch?v=9jykIqQxEOw, ended 23 years of conservative rule and its dismissal by the governor general Sir John Kerr on 11 November 1975 .. http://whitlamdismissal.com/ .. remains one of the most controversial events in Australian political history.
But in just three years the Whitlam government instituted sweeping changes that transformed Australian society as the baby boomer generation came of age.
In a rapid program of reform it called “the program”, the Whitlam government created Australia’s national health insurance scheme, Medibank; abolished university fees; introduced state aid to independent schools and needs-based school funding; returned traditional lands in the Northern Territory to the Gurindji people; drafted (although did not enact) the first commonwealth lands right act .. http://www.clc.org.au/articles/info/history-of-the-land-rights-act/; established diplomatic relations with China, withdrew the remaining Australian troops from Vietnam; introduced no-fault divorce laws; passed the Racial Discrimination Act; blocked moves to allow oil drilling on the Great Barrier Reef; introduced environmental protection legislation; and removed God Save the Queen as the national anthem.
But the Whitlam government’s economic record is more controversial. It came to power at the time of the first oil shock and failed to contain wages inflation. In 1975 it was embroiled in what became known as the “loans affair .. http://www.naa.gov.au/collection/fact-sheets/fs239.aspx” when the minister for minerals and energy, Rex Connor, sought to borrow money for resource projects, outside normal treasurer processes, from Arab financiers using a middleman called Tirath Khemlani. No money was borrowed but the scandal deeply damaged the government.
Whitlam won a double dissolution election in 1974, with a reduced majority. But from October to November 1975 the parliament was deadlocked, with the opposition using its numbers in the Senate to refuse to pass the budget. When Whitlam visited Kerr to call for a half Senate election, Kerr instead withdrew his commission as prime minister and replaced him with the Liberal leader Malcolm Fraser .. http://primeministers.naa.gov.au/primeministers/fraser/.
Whitlam lost the election to Fraser after the national upheaval of the dismissal. He stood down as Labor leader and retired from politics in 1978.
A towering figure at 1.94m, with a deep resonant voice and an eloquent turn of phrase, Whitlam inspired a generation of progressive politicians and was widely referred to by just his first name. His is remembered for some of the most famous quotes in Australian politics .. http://www.successories.com/iquote/author/48642/gough-whitlam-quotes/1, including while standing on the steps of the old parliament house after news of his dismissal. He said: “Well may we say ‘God save the Queen’ because nothing will save the governor general.”
He was a graduate of Knox Grammar and Canberra Grammar and joined the airforce after university, before studying law and being admitted to the bar. He married Margaret Dovey in 1942; they had four children.
He won the western Sydney seat of Werriwa in 1952 and was elected leader of the Labor party in 1967, succeeding Arthur Calwell.
After leaving politics he worked as Australia’s ambassador to Unesco, accepted several visiting professorships and, along with Margaret, received life membership of the Labor party in 2007.
Margaret died in 2012. Whitlam, by then using a wheelchair, had moved into an aged-care facility in 2010. He described her as “the love of my life”.
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