Thursday, August 08, 2013

False. Rudd and Abbott on the cost of living

Australian families are “all struggling from cost of living pressures”

Kevin Rudd, media conference August 5 2013

“For the average family in Australia today, costs are going up and up and up.”

Tony Abbott, media conference August 6 2013

Anyone would think our cost of living spiraling out of control.

Kevin Rudd used the phrase “cost of living” an extraordinary 14 times in his press conference Monday. On Tuesday Tony Abbott used it four times. Abbott spoke of “cost of living pressures”, which would mean that not only was the cost of living “going up and up and up”(his words) but that it was going up faster than household income. Kevin Rudd’s claim was universal. He said Australian families were “all struggling from cost of living pressures”.

Supporting evidence

Rudd mentioned childcare. Abbott mentioned electricity and gas. Electricity prices have climbed 17 per cent in the past year, gas prices 15 per cent. The government credits the carbon price with 10 and 9 per cent of those increases. The cost of childcare climbed 7 per cent.

Does it stack up?

If that was all you noticed, you would feel squeezed.

But the consumer price index also records that the price of food has climbed an unusually low 1.1 per cent in the past year, and the price of petrol has slipped 3 per cent.

Taken together it doesn’t point to a squeeze. The overall consumer price index climbed 2.4 per cent, including the carbon price. The typical pay packet climbed 3.1 per cent, NewStart climbed by less, and both were boosted further by carbon tax compensation.

Or course not all households are the same. The Bureau of Statistics says the costs facing aged pensioners climbed 2.6 per cent. The costs facing welfare beneficiaries climbed 2.5 per cent, and those facing employees climbed a very low 1.4 per cent.

Lower mortgage repayment costs are are part of the story for working Australians. In the past year the standard variable rate has slid from 6.85 per cent to 5.95 per cent.

Australians wanting to complain about longer-term trends will get no support from an AMP National Centre for Economic Modelling study released last May. It finds the average family is ahead by $224 per week compared to 1984. Low income households are $93 per week better off.

But AMP financial services managing director Craig Meller says we don’t feel that way perhaps because we are listening to our aspirational selves “telling us we need more”.


Kevin Rudd and Tony Abbott are telling us what we want to hear. Politifact rates both of their claims taken together “false”.

In Politifact and The Sydney Morning Herald

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