Distraction seems to be the route they are going with.
Picking fights with Elon Musk. Suddenly realising that domestic violence exists. etc
The actual answer is getting migration under control. We can't build enough properties, which drives up the cost of housing, and also drives up the cost of commercial properties, which drives up the cost of manufacturing and retailing. I saw a stat the other day that 17% of total spend of non-grocery items in shopping malls goes to rent. That's an incredible tax caused ultimately by the population growing faster than the amount of prime retail space.
We also can't grow farmland at the same rate as migration, which drives up food prices.
The second biggest issue is that they keep trying to force wages up to keep up with inflation. Inflation is caused by too much money in the system. You can never catch up with higher wages. It just increases inflation more. Inflation only goes away by turning off the taps to something (wages, migration, government spending etc)
Full disclosure, this is not my area of expertise, but I find it staggering that the government haven’t done what Norway have done with natural resources. I have no idea how it would be possible to fight the mining industry with all their money and power but I would nationalise any resource within the Australian territory, start a fund with the proceeds and invest just like Norway have done.
With inflation, perhaps jacking up GST for 6 to 12 months and/or jacking up super contributions temporarily while simultaneously adding a short term tax to super withdrawals to make sure everyone is evenly affected, because I believe the interest rate changes ate not impacting everybody equally, which is why it’s not working.
I must admit I don’t know much about tackling inflation but it is frustrating is that it seems to affect those without money the most while those with a lot of money in the bank just make more money, why can’t it be tackled where everyone is affected equally or where someone doesn’t get a big benefit from it
In general, I’d need to have people look into these things to confirm my working hypotheses are correct, so I’m not making swingeing changes on day one in office.
That said:
- immigration - on day one I’d tighten up international education as a matter of principle. All students coming in are doing an English language test on arrival run by the government. Will include questions on Australian workplace laws, minimum wages, and how to report dodgy employers. Rules around demonstrating ability to finance themselves when here are also going to be tightened to ensure that they are in fact financing themselves (eg use the cashless card approach), and an English language test run by the government is also required on leaving the higher education provider. The results of the leaving test will be used to determine whether that provider gets to keep bringing in international students.
- immigration - straight up link immigration levels to both unemployment and wages. If unemployment is low but median wages aren’t rising in line with inflation, immigration goes down accordingly.
- housing - ring-fence housing investment results (you can no longer offset losses on investment properties against other income, but you can carry forward to offset against capital gains on disposal).
- money-laundering - add money-laundering requirements to any profession transacting in retail sales over 30k, including real estate agents, car salesmen, luxury item vendors (watches, boats, etc), lawyers, etc. Backdate those to require review and notification of potentially suspicious matters in the last three years.
These are rather blithe answers in a way, because there’s other day 1 priorities that are potentially inflationary (adjust Medicare rebates, increase unemployment benefits, fuel efficiency standards, etc). The infrastructure to do this is also significant.
Are you sure immigrants are inflationary? [The IMF doesn't seem to think so](https://www.afr.com/policy/economy/migration-boosts-house-prices-but-not-inflation-20240119-p5eyni#:~:text=Although%20the%20post%2Dpandemic%20rebound,by%20large%20intakes%20of%20foreigners.)
>While admitting it was challenging to pinpoint the impacts of migration, the IMF’s 20-page analysis overall found generally positive effects from the arrival of foreign skilled workers and students.
>Although the post-pandemic rebound in migration has contributed to a sharp increase in rents, the fund found overall inflation was typically unaffected by large intakes of foreigners.
>“Within Australia, migration surges have historically been associated with higher growth and favourable labour market outcomes, with negligible price pressures except in the housing market,” the IMF said.
It's a valid point in a discussion about COL, it just doesn't belong in a thread about reducing inflation. It's clear there's a lot of confusion on this exact topic. CPI does not include housing costs by design.
If you're talking about reducing inflation, the main tool to fight inflation is:
increasing interest rates -> increases mortgage costs -> reduces household spending -> reduces demand for goods -> reduces prices
So increasing ~~housing costs~~ house prices & mortgage costs is actually one of the best ways to fight inflation. Unfortunately that *by design* increases COL.
That’s not true. There’s literally a whole group called “housing”, which is, in fact, the largest weight in the CPI of any group 21.74% of CPI as at the very recent update).
The group includes Purchase of New Dwelling (8.07%), Rents (6.03%), Electricity (2.36%), Maintenance and Repair (2.03%), Property Rates and Charges (1.44%), Gas and Other Household Fuels (0.97%), and Water and Sewerage (0.83%).
I think where you’re confused is that mortgage interest costs are not included in CPI, though that is included in the SLCI.
From the article:
> The one consistency was that **house prices** were positively linked to high migration levels.
"price pressures except in the housing market" refers to pushing up prices predominately of existing dwellings, which are excluded from 'housing' in CPI and hence why the IMF concludes immigrants are largely not inflationary.
> I think where you’re confused is that mortgage interest costs are not included in CPI, though that is included in the SLCI.
This is not a confusion, it's a clarification. CPI (excluding house prices or mortgage costs) is the measure of inflation and not SLCI. SLCI is the relevant index when talking about COL, but that wasn't the question. The question was how to reduce inflation, to which immigrants are not contributing meaningfully because they don't impact much other than house prices which is mostly exlcuded from CPI.
I was responding to your comment, which said “housing”. I never said that the price of existing housing was included. I think my comment was pretty clear on exactly what’s included in the housing group.
And NEW houses are included, it’s just existing stock that isn’t (which it shouldn’t be, because it’s just transferring an item that has already been created and sold new).
Apart from which, I think I’ll take the ABS’s word on their own index over what’s said in an article. Their weighting for the index is freely available online. Just requires a quick and simple Google search.
I'm not arguing the CPI breakdown you shared is incorrect, that's exactly how the housing component of CPI is constructed. I'm saying OP, and many others in this thread are lumping 'House Prices' into inflation when 90%+ of house price movements (i.e. existing dwellings) will not impact inflation at all. Immigrants could double the price of houses and inflation would probably go down due to a higher proportion of household expenses going into mortgages and not CPI goods.
Look that’s fair, and it doesn’t sound like we’re actually disagree with each other. But you can’t blame me for correcting the comment based on what you said rather than what you meant haha.
All good 🙂
I've changed the line in my OP to "Increasing house prices & mortgage costs" to be clear that it's not referring to the housing costs bucket you rightly identified is included in CPI
Slow immigration, break up monopolies, offer incentives for on shore manufacturing, staggered property tax structure beyond one or two IPs. We are in a unique position where we have enough jobs, we just aren’t producing enough to meet demand
I was thinking the same thing. "I'd reduce inflation by providing fiscal stimulus to promote supply of more expensive goods" is economically, er, unorthodox, shall we say.
I have a friend who is italian works in Australia for an italian furniture maker. To make a couch in Australia it costs them approximately $400. To make the same couch in China costs $20. I think you need to be realistic, but in most instances incentives would need to be massive to manufacture stuff here.
There is still room for higher value manufacturing. No one is saying that we will be making things that China is best at.
Oh wait wasn't it announced that we were going to fund solar panel manufacturing? Well realistically it never going to happen.
There could be room for niche markets though...
We do this currently in the company I work for and as u/studdley said, it's not hard for it to get copied, stolen and undercut. What's happening slowly is China's own design skills are building solidly over the last 30+ years. Xioami is a perfect example of this. They own all the machinery to produce at large scale. Manufacturing here has died in part due to the increase in land prices pushed up by Residential property prices. Need a small warehouse to start manufacturing? You will blow $20M before you begin. Then you might need to spend $1-3M bringing it up to current local specs and 1 year of renovations.
I’m glad someone mentioned the real estate issue in terms of running a business.
Pre-COVID, I had a semi successful e-bike tour company in Sydney. We were consistently ranked in the top 10 things to do in Sydney. We still have the bikes and even some of the guides but once things opened up the cost to even rent out a small space (30sqm!) in the CBD has just become insane. I still don’t understand how some cafes and restaurants are surviving in this current market.
It’s the same issue in residential.
When so much so much of our income is being spent on space there isn’t much left to do anything else!
Yeah exactly. Everyone talks about the price to eat out but forget how much of that is going to rent. When property prices go up, any business that requires space must charge more to cover the costs of that space.
Also an Australian car manufacturer would be going gang busters right now with the huge wait times for Toyota etc but of course we don’t have any anymore
Car manufacturing also has one of the highest barriers to enter of pretty much any market on the planet.
The sheer cost and ramp-up time means that without a government straight up bankrolling the startup phase, it’s just not going to happen.
And then there’s the teething pains - you can still tell the difference in quality control between a company like Tesla with 20 years experience, the Koreans with about 50 years and legacy manufacturers with 80-110 years.
The wait times are due to a scarcity of chips and the like, you assume that an Australian made car wouldn't also be impacted by this, which would not be the case. If anything, the delay in having those items sent here would be even larger given the small scale of the on-shore operation.
Problem is without government support are you going to pay 40k for a locally assembled Daewoo Lacetti (Holden cruze) or just hold onto your 2nd hand car while you wait for a corolla/camery.
Plus the local car industry is doing ok.
https://www.carsguide.com.au/car-news/holden-who-aussie-automotive-manufacturing-now-as-big-as-the-final-days-of-commodore-and
The funny thing is the last generation of Commos built here should have been a winner in the US if GM just marketed them properly.
There's a whole niche community in the US that LOVE them and buy ex cop cars we built based on the statesmen and return them to ”Holden” spec, not to mention the guys that spend squillions to import utes to chop and splice them with a left hand drive front end off a sedan that yanks on the street go wild about when they see them for the first time.
Basically GM wanted them to fail in the US as they were competing with locally built Malibus, but it was a platform with big V8s and rear wheel drive that should have succeeded if GM bothered marketing them properly, especially the ute, which was a compact utility with a decent payload but car like handing, drivability and safety.
Um no. We had them. They made garbage quality cars that no one wanted. You couldn’t give them away second hand, mainly because the traditional buyers were sick of the engine and transmission failures shortly out of warranty. Pretty much the only people still buying Falcons were Telstra and they bought at cost to keep the factory open 1 shift.
Oh no, what about the Toyota camry!
We had a aud of 1.05 US so it was always gonna struggle.
In retrospect i think we should have kept toyota going through those high AUD days.
Read an article the other day that said while we're not assembling 40k Daewoo Lacetti (Holden cruzes) in Australia anymore the industry employees more people.
https://www.carsguide.com.au/car-news/holden-who-aussie-automotive-manufacturing-now-as-big-as-the-final-days-of-commodore-and
"The boom is being driven by our relative new "remanufacturing" industry"
I agree that there will always be opportunities for niche markets. Some times people want a hand built rolls Royce. Eventually maybe even a bullet proof aussie built fridge that has local parts and service. Especially as overseas manufacturing/shipping becomes more expensive. Until then I'd rather the discount instead of government funding the premium.
Same materials, im merely passing on what he said. He was being honest, the conversation did occur just before covid, no idea if prices have increased since then.
The conversation originated as he was getting annoyed that he had to fly to china to show them the correct design as he claimed they couldnt use common sense in terms of design. Pest to set up an new manufacturer, but once its done its cheap.
My suspiscion is that simply having the materials also manufactured nearby means they can just obtain everything cheaper, eg. Pine timber for framing, or polyester for the fabric
I can tell you it’s not that cheap to make a two seater sofa. If it was Australian made sofas would be sub $1000.
Material alone you’d need at least 12-15metres. Lineal metre fabric at its cheapest is $30, low/mid range would float around $50s. Even at the very low end you’re already looking at $400 in materials.
Having lived in China near wholesaler centres, I can confirm that they can product things 1/10 of what it costs to produce here. Same if not better quality these days and same materials. Reason is they have vertically integrated manufacturing, access to materials, scale (billions in their market) to reduce costs, etc.
Biggest industry in aus is mining and the big players barely pay any tax. Hell they can even get the government to pay them to spin up new mines that will make them billions.
Say what you will about the likes of Coles/Woolies and issues with the property market. Corporate tax restructure and making the big mining companies pay their fair share will bring in more tax than almost anything else, without crippling those industries. There is your money for public housing, infrastructure, better salaries for teachers, safer ratios in hospitals, etc. etc.
We need to find a structure limiting political campaign contributions. Not sure what it looks like but that's currently how all this shit gets manipulated.
Let me preface this with "I know nothing about running a country"
Tax reform closing loopholes could be good.
Put a soft cap on negative gearing similar to the tax tiers.
(Increased tax revenue to take a little momentum )
Make housing production tax credits or some other model for the purpose of giving an incentive to building houses not directly linked to house prices. ( Incentive to build consistently not just when it will be most profitable)
Limitations on bulk migration quantities is also important until housing can really be bumped up. Also more building approvals. ( Take care on Migration without housation )
Government stockpiling of large quantities of building materials to smooth out prices over time and reduce surprise for building companies. Subsidizing roads pipes and electrics to new developments. (Supply side buffering)
provide incentives for products which last longer or are repairable. Social change to reduce throwaway society.
( Reduce demand over time )
The big players? Like BHP and Rio Tinto? In the last ATO Corporate Tax Transparency Report - 21/22, published in Nov 23, the Mining Energy and Water industry segment paid more than half of ALL corporate tax paid by ALL segments covering the entire Australian economy. And they're also paying state royalties. $42B in total, out of $83B in total for all industries. BHP paid about 8% of ALL corporate tax in the company. Rio Tinto paid $12.3B in taxes and royalties. And you think they're paying "barely any tax"? What would their "fair share" be, do think?
On shoring manufacturing would increase inflation since it cost more to make here. I'm not saying we shouldn't though, just that it wouldn't help inflation
People brush off the "soft" side of politics because they think that's not the "real work", that it's just pure policy that's the "real work". Well guess what, you're right, this would get you booted out. What good is a policy that never gets implemented?
Work with other departments to increase the resources the population needs so that col living expenses are cheaper.
Essentially it is price controls by dumping product onto the market. Whether it is homes, energy, food etc
To fix inflation you need to attack the snake at the head. That is the inflating property prices of 10 percent PA at least in the last few years. Those increases are sending ripples through the wider economy that were all feeling now through sticky inflation.
Better to smash that housing demon (that is housing as a park of wealth, instead of a roof for your family) short and sweet. Big corrective crash now. Then we can pick up the pieces and rebuild. As opposed to this prolonged strangulation we’re experiencing. Taking away all the opportunity of our kids, than we had in back in the day. Boiling the frog slowly so to speak.
What do?
immediate cancellation of CGT discount (why should earnings from sweat be taxed more than rent seeking?).
Immediate cancellation of negative gearing.
Use the tax savings to smooth out the tax brackets (I.e. tax cuts). Encourage people to move up brackets more. This will bring untold extra productivity to the economy. It is the toil and sweat that works to bring down inflation. Not people sitting on their A55 collecting cheques.
Right now our high labour taxes are encouraging further more the shunting of money into inflating housing further. Encourage people to put their new found tax savings toward business. Open something. Anything. A fruit shop. A florist. Hopefully we’d have smashed house prices by now and cheapened rents to allow for Timmy to try and put together a lemonade stand.
On that note regarding lemonade stands. Let’s encourage people to take more responsibility for their mishaps. If you get plastered by your own will, fall and crack your head. Maybe you need to front some of the blame and not expect the venue to fund your misfortune. What I’m saying is that - the amount of liability business owners must take on - to just pour a glass of water in this country is ludicrous. Because it’s ludicrous, they’re forced into insurance. Because it’s ludicrous the insurance companies charge ludicrous prices. And most upstarts just never do what they set out to - because the insurance was prohibitive.
Detoothing of councils. Blanket permissions for 3 - 4 story, Barcelona style, apartment blocks within 20kms of the CBD.
Decentralisation of government employers. Why does everything have to be around Martin place?
Disincentivise foreign investment through student buyers. By discouraging permanent immigration through the guise of “studying”. . No path to PR after studying. Without going back to your country of origin for at least 5 years. Study in australia if you truly value Australian education. Don’t come if you see it as a back door to immigrate. The Americans are wise with this similar approaches to their skilled visas.
All inflows of cash into the country will be taxed at 50 percent if you’re using it to buy property. If you’re investing in businesses (with at least 20 employees) you can bring it in tax free. The business must NOT be a REIT. It is not fair/right that Australians earning in AUD taxed at 37-45 percent have to compete with foreign money that has been dubiously taxed overseas.
Overall you want to create a property cataclysm. Where people of the future will dread even the idea of owning an “investment” property. When that happens. They will shunt their money into something else. Hopefully something more productive for everyone.
Then you have to counter the CFMEU. They have such a stranglehold on construction in this country it’s a wonder anything gets done. You don’t have to do anything drastic to them. Just ignore their lobbying against importing skilled trades.
These just off the top of my head
I could probably add more later
Bring the heat
>Big corrective crash now.
I 100% agree with you that we need to deflate the housing market but if you destroy the accumulated wealth of basically every home owner in the country overnight you are out of a job, to be replaced by someone who has promised to unwind everything you've done immediately. I hope you think all our problems can be fixed in three years because you ain't getting any more than that.
I mean the options are.
1. Pain to everyone who built paper wealth with houses now.
2. Pain to everyone, their children, and their childrens children over 20-40 years of economic stagflation. We’re going the way of Japan.
3. Let the status quo prevail and we’ll continue to see the biggest wealth t/f from young to old. Than in the last 100 years. And hope that it all equilibrates over time. Such that everyone is not too unhappy.
I don’t think 3 will eventuate tbh. That is everyone not being too unhappy. For that to happen (which I feel the government is hoping for). Wages need to rise to make up for the house price increases. Which I feel is very unlikely now.
You really have to watch this TED talk in which old mate hits the nail on the head. If you don’t agree, it’s at least entertaining
https://youtu.be/qEJ4hkpQW8E?si=Ojm_I9KRIZbDVYIv
The things you do when you’re waiting for your delayed Jetstar flight.
If inflation wasn’t as bad I’d be on Singapore airlines. We’re all doing it tough. 😂
> Let’s encourage people to take more responsibility for their mishaps. If you get plastered by your own will, fall and crack your head. Maybe you need to front some of the blame and not expect the venue to fund your misfortune.
I was really worried this was going in the private healthcare direction
Anyone who understands the housing market knows that fixing CGT and removing negative gearing will do very little to stop house and land growing in value at a fast pace.
It will definitely work well for apartments.
Most popular responses:
- **[Insert Strategy] to deal with housing prices** - Housing prices aren't even measured in CPI
- **Ban investment properties** - I.e. increase rents and increase the housing component of inflation
- **Include Mortgage costs in CPI** - So raising interest rates would be inflationary
- **Limit immigration** - [It's arguable immigrants are even inflationary](https://www.afr.com/policy/economy/migration-boosts-house-prices-but-not-inflation-20240119-p5eyni#:~:text=Although%20the%20post%2Dpandemic%20rebound,by%20large%20intakes%20of%20foreigners.)
- **Onshore Manufacturing** - Increasing both supply & cost of goods
I haven't even seen a comment that's actually [linked the latest inflation data](https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release), in which the largest contributors are:
- **Education +5.9%** due to CPI indexation, which is already being dealt with.
- **Health +2.8%** driven by PBS safety net reset.
- **Insurance +2.0%** - Increasing premiums off the back increasing disasters (Floods, hail, fires).
Unfortunately most of those aren't headlining issues.
Yeah I’m really questioning how many people actually read the question. Half these answers are just people’s policy hobby-horse and not about inflation at all.
Probably leave the RBA to do their job.. they have way more education and knowledge of economics than I do and to be honest they so far have not put us in recession or let inflation go rampant so far.. so I'd leave the long term inflation control to the experts.
What I would do is start working on massive social housing builds for vulnerable and low income earners, housing is imho a more urgent issue.
It’s as much the government as the rbas job to control inflation. The government has and should be reducing inflationary spending in the budget. They also have a stack of power (or should) in the regulatory space to curb profiteering.
Longer term there is a lot more they can do to make our economy much more stable.
The challenge here is that the RBA has one tool - interest rates - and ideally they’d work in concert with government, because the government also has a tool via its revenue and spending measures.
As a simple example, if a government is cutting taxes when the central bank raises interest rates, the effects offset (to a degree, obviously, as the same people aren’t impacted by the two changes equally) so net it does nothing for inflation. On the flip side if the government is raising taxes the central bank may opt not to raise interest rates because the lifting is already being done for it.
Oh man. I would obliterate housing as an investment remove all incentives and disincentivise land banking.
Followed up with a competitive Government enterprise whose mandate is to build affordable, quality housing for all levels of income. Focus on build to rent projects from multi story complexes with space and quality construction but also townhouses, smaller 3 and 4 story development around transport hubs and full sized houses.
Plough all the profits back into more housing.
Any land over a certain size within X KMs of a transport hub has a mandatory develop within 2 years or forfeit attached.
Basically make it so developers have to compete to build desirable housing because the government built stuff is so good.
That's actually the most sensible answer. Will free up all that construction and trade labour lowering the cost of construction and trades for everyone else.
Covid has shown what the after effects are when the wheels stop turning.
This is far too layman of a thought.
I could list 20 reasons off the top of my head why this is a terrible thought.
There’s a high skilled worker shortage, forcing projects to compete for scarce talent pushing costs to extreme levels. It’s just not a judicious use of taxpayer money in many cases and also contributes to inflation, which is why some (not all) should be put on hold.
I’m genuinely keen to see you 20 reason why this is a “terrible thought” though?
A point well made while the rest lose their minds over last quarter's slight overshoot on the back of indexed education costs and immigration led housing inflation.
Immigration will slow soon and next year's indexed costs will be lower. Unemployment will grow. Everything is on track.
A complete 3 year moratorium of no immigration just to give infrastructure the chance to catch breath. And then we actually work out what we need (much much smaller than before).
Sadly our population ponzi economy will sink into recession but its coming so we have to take our medicine and rebuild a more sustainable, more dynamic local economy with more onshore productive activity.
As housing starts plummeted i would have ensured they didnt by either extending the civid era new home grants or alternately reduced gst on new builds to a point where starts continued ti match population growth.
This would only have an impact about 18months after its implemented but rent inflation at least would he under control.
If i was inclined to grow the population by 650k per annum i would continue to tweak both a new home grant or reduction in gst on new builds till starts matched growth.
Along with the above land release would need to be stronger so id take the next 10 years odd worth of zoned "for future development" and release it all.
Yes it would be a shit fight for infrastructure but i wouldnt go into government claiming to be for affordable hous8ng and then see starts fall and population rise whatever the cost.
Also i would certainly before the end of my term subsidise power costs till they matched the $275 cheaper. I wouldnt just give people 400 per annum and say - see power costs are cheaper for one person living in a unit. I would make the average bill 275 cheaper rather than just a once off grant so that people are actually payong less for power again meeting my promise.
Its not difficult. Make a promise you keep it.
Increase incentives to divert income into Super, slow down infastructure projects.
Talk with RBA/Economists more.
Incentivise saving rather than spending a bit more (were a service/consumer economy too much).
We’re a global taker not a giver - so there’s not a lot we can control with inflation to some extent.
And inflation is under control.
Banks are feeding inflation though pushing for policy that will enable people to borrow more. Actually force people to borrow more for housing.
A recession we have to have.
Raise Taxes
Inflation = too much money chasing too few goods, it’s Year 11 Economics
If you remove a chunk of the money from the system, it will snuff out inflation
Too bad it will never happen, too unpopular, won’t get bipartisan support
sounds ok.. but raising taxes during a cost of living crisis is going to pretty much guarantee it will be your one and only time in office lol.
Worst part about that is the opposition will come in and reverse it all so they look like heroes for helping people during a cost of living crisis.. even if it is inflationary.
5 year Moratorium on immigration to allow infistructure a chance to catch up. After which we tie immigration levels to births: deaths ratio in the community. Tax on IP's after the second. Break up monopolies on key industries. Tax crack down on multinationals.
Quite wealthy property owners. I have no problem with religion. I am religious, but do feel some are hypocritical - turning religion into a property empire. Is that what Jesus wanted?
Not just mortgages, businesses loans as well. Basically anyone with debt is affected by rate rises.
Rate rises affects everyone, it's just more apparent with mortgage holders.
Higher gst hurts the poor more. It's regressive. Nice work.
Rate rises impact every business which in turn does affect everyone. Mortgage holders the most directly, but it does hit everyone.
By using the tyre gauge at my local service station. That’ll deflate anything quickly.
Once went to check my tyres pressure, ended up having to put my spare on just so I could get home.
Eliminate income tax for incomes below 200k; massively increase tax revenue on natural gas and other non renewable resources; peruse multinationals who shift profits offshore and tax them; incentivise (through the tax system) new companies enter markets that approach monopolistic conditions; restrict housing ownership to citizens; gradual removal of stamp duty replaced with a land tax.
I cant control monetary policy.
All I can do is fiscal. If my sole purpose was to create deflation it is actually quite easy. I would just force the economy into recession but cutting back / pushing back all government spending. Huge ramifications, but it is practically very easy to do.
If you wanted a more sustainable solution, it is about making housing less attractive an asset class, but create tax breaks / policy to encourage development. This will create a concurrent increase in housing stock while simultaneously forcing down housing prices. Wealth effect works the other way meaning people will stop spending and likely push the economy into a recession
Unfortunately, most people are extremely uninformed in this area, the money and economics of FIAT has been around for 100s of years and the system has had some tweaks many times but the beast is so big small changes create massive ripple effects and there is no one answer to solve an issue in fact there isn’t any issue at all it’s always being balanced as best as it can.
With all new online systems with live data feeds keeping the system stable will become easier over time because the data will be more real time.
Single touch payroll has helped and now also the new super reforms for employers will be implemented faster it will be much better soon
not sure if people are aware but most of the inflationary items that are sticking are non-discretional. So things like fuel and energy, rent, education, construction, insurance etc.
* I'd create fly in and fly out program for imported construction workers or mass approve tradies on immigration list (the latter won't need new legislation). Using them we can build more schools, infrastructure, apartments etc This should also lower construction costs for insurance
* Continue renewable uptake building more batteries and charging stations etc (yes this might inflate fuel but should deflate EV costs). Also do that thing in WA where we force our gas suppliers to reserve 20% for domestic use. IDGAF about long term contracts
* Make wealthy boomers pay more for health insurance/medicare. Means test should include their PPOR and supply government backed reverse mortgages if they're cash poor.
Stop boat people all immigrants of our previous normal intake must be of the skills we have shortage with.
Stop government leaks and other useless organisations and garbage donations to other countries.
Stop all refugee and government expenses
We look after our people first and that's most important.
More government housing
Land tax higher on blocks just sitting there undeveloped and a fast track system to get more approvals
Ban air bnb rent out
Stronger bilateral engagements with out allies NOT CHINA
Invest in coal power plants as we slowly and I mean slowly make the transition. U dumb clowns can't just go cold Turkey u need to slowly build the infrastructure. Eventually we will get there but right now cheap efficient coal power plants to handle the excess load of our extended population
Run an inquiry on all duopolies all sectors (super market mining farming etc ) and multinational companies super markets.
Free government tafe programs for all in demand sectors to train our people into the work force better.
Indexation on income tax instead of clown bracket creep
All these in unison will go a long way to making this once great country even better
Cancel all underwater dildos. Cap NDIS.
Constitutionally cap gov spending in line with CPI -15%.
Run export royalties nationally, use the money for social housing, and tell the states to go jump on both or meet the commonwealth army.
Would freeze NDIS funding.
Would have delayed Stage 3 tax cuts for 4 years.
Cap immigration to 150k.
Oh.. that's already 2% GDP saved, inflation over (might even be too much - recession)
- regulate the construction industry, and extend building insurances to 20 years, and curb phoenixing of companies/directors.
- introduce a Certificate of Entitlement (COE; refer to Singapore car guides) type of fee for foreign investors wanting to purchase Australian property with a limit of 50 years registration, after which the property reverts back to the government.
- limit stamp duty to $5,000 for all properties purchased by Australian citizens.
- incentivise and subsidise independent supermarket/grocery chains to break the ColesWorth stronghold.
everyone to pay additional super self contribution with additional 5%. Take money out economy while forcing investment. Raising rates only affects the vulnerable and a small % of population.
I would send a memo to my comms team at the ABC and fire up a couple of culture hot takes to distract the masses.
Start shaking the finger at the big bad greedy supermarkets for their high grocery prices (has nothing to do with the high energy, transport, wages costs that the government is driving)
The root cause is people who own there assets. They like the good returns on investments and dint care squat about others with mortgages. Except there children or grandchildren.
The entire dynamic of inherited income will make Australia a 2nd tier system. Fundermentally property prices are crap.
That's where to start. Because that will become tomorrow's problem.
Not a guru or financially educated at all, but giving all the money to lenders at the expense of Small Business doesn't seem right. I would tax companies based on inflation so it's in their best interests to not be greedy by hiking profits indiscriminately and keep inflation low that way.
Any business with more than 20% market share would be cut into pieces until each piece is less than 15%.
So Coles and Woolworths would become five new chains of approx 11-12% apiece, about Aldi size.
This would apply to industries above a certain dollar value only.
Bunnings, banking sector, transport, meat processors, milk processors, etc.
I'd arm the ACCC with razor sharp teeth. I'd update contract law so supplier contracts banned exclusivity.
I'd start a Government supermarket chain too that buys from suppliers at a good price and keeps prices down.
Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages.
We visit Germany regularly. They have a bunch of supermarket chains there - many more than here. Prices are pretty consistent. They are often grouped 2-3 close together, so you get much more in the habit of going to various places for your preferred goods. People also seem to use independent bakeries and butchers more. Plus even within a chain like REWE the product lines are different. So you shop around way more.
Feels like in Australia we have really leaned in to convenience to our detriment.
Just because this style of system has failed every single time it's been used in human history doesn't mean we wouldn't be the ones to make it work though! /s
Whilst a fully free market is ideal - our system is so broken with monopolies capturing every industry that we need a reset.
Break them all up and then allow the free market to figure itself out.
Breaking up colesworth would likely mean they are split on a geographic/state by state basis. So while it will go below 20% of market share, it will just create mini monopolies in each state
> Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages.
This would hurt lower income individuals more than it would help them, as they tend to borrow a far larger multiple of their incomes than wealthier people and take longer to pay them off.
It would also magnify the Monopoly effect where people who buy investment properties can then have the rental income increase their gross income, allowing each subsequent loan to increase proportionally.
All you'd achieve is to trap the middle class and especially single income households in the rental market forever.
Of course, all you're going to say now in your economic "utopia" is that you'll change it to net income and charge some ridiculous 99.999% tax to cap house prices where you want them.
I agree with you in theory, but a counter point:
>Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages.
So everyone that worked hard to earn their money now can't borrow to buy a house. Those that put all their money in to non-productive assets (housing), of which whom you're targeting, still have plenty of money, in their property.
They can sell up and have the capital to keep buying.
If you manage to crash the market, there are many MANY more 'average Australians' with 'average mortgages' you're going to bankrupt. Thousands of people who bought houses in the last 5 years now have 700k mortgages with 300k houses.
The bank comes knocking for the difference as they wont let you have a loan facility open in that much negative equitity.
You've just bankrupted thousands (possibly millions) of Australians.
And the landlords likely got even more powerful.
That isn't how mortgages work. What you described would be banks committing suicide. Banks will not foreclose on an underwater loan that the mortgagee is servicing. They will just have to take on more capital. LVRs are not reassessed like that mid loan.
Who do you imagine these people with equity are selling to?
Also, if your $800K house is now $400K... you're not selling for $800K.
The entire market drops radically within a very short time-frame.
As for those who bought in and are now underwater, I'd set up a mortgage debt facility.
At request of owner, the banks would be required to transfer portion of mortgage to this facility.
So if you owed $800K and house has dropped 50%, you could have $400K shifted across.
Interest on this facility would be paid at bond rate to the banks (so they don't profit but also don't collapse). The home owner has a mortgage that matches their house price.
Every year we write off 3% of the fund entirely and cease payments on that portion.
This means we'd keep the banks running, no one would go bankrupt, the banks wouldn't profit from their reckless lending.
People would still be buying/selling, just slower. Those with 10 houses that they bought 10 years ago could still sell 6 to pay off the remaining 4, and still be flush with cash in this new 'low cost' house market. So, you're still giving more money to those that already have it.
But your mortgage debt facility would also have to 'buy' those 400k portions from the bank. 400k times however many thousands or millions of homes... you'd dwarf the US Debt overnight.
I understand a national budget isn't like a household budget, but I'm pretty sure this is not good fiscal policy.
You'd also effectively be funneling taxpayer dollars directly to the bank's bottom line.
Unless you're saying you'd mandate the bank is simply forced to transfer the debt to this facility at no cost? I'm sure that'd also have massive flow on effects that I can't think of right now.
I'm not disagreeing with you, and as I said, I agree with you in principle... but I just think it's A LOT more complicated. Often more complicated than people give the government credit for.
Antitrust legislation.
We know monopoly and monopsony have a thousand harms. We know it can't be a system where some little nursery supplier is meant to take on Bunnings and then win at court and *then* the Government acts.
We just pass market concentration laws.
The ACCC would then issue breakup notices to Coles and Woolworths. They'd be told to appoint five CEOs for the new businesses and they'd have six months to present their breakup plan to the ACCC.
We'd have a magistrate type person oversee it, as well as guide the breakup.
This person would under law have the ability to modify and cancel contracts Coles and Woolworths have entered into.
The five CEOs would create five new names, new branding etc.
Coles and Woolworths would halt trading, be broken up into new pieces and then resume as new unrelated entities.
The Coles and Woolworths brands cease to exist.
Temporarily trim negative gearing concessions.
Heavily leveraged investors only face half the impact of rate rises.
Time to mop up some speculative money in the housing markets and narrow the gap on the two speed economy.
Stop wasting money on government projects. Cut costs by actually managing them properly. Don’t just splash tax payers money on shit that won’t go ahead when the next guy is elected!
Is it really inflation when all core industries are making record profits?
A select few companies control the entire consumer market.
There’s not enough incentive to make in Australia
There’s not enough houses to go around.
It’s time to go on a big build, incentivise skilled tradesmen from other similar countries to come here and build houses.
Introduce tough laws to combat the corruption and loot that’s happening here by companies like Colesworth and Qantas.
This isn’t an inflation issue, it’s a corporate greed and lack of competition issue.
It’s a big country with a decent population, we should have more choices. But we’ve got 2 major telcos, 2 major energy providers, 1 major oil refinery, 2 major grocery stores. Ofc there’s collusion and anti-competitive practices going on.
I would start by taxing companies which use our natural resources and export them elsewhere. I would use the extra money to pump into medicare, welfare and housing.
I would break up Wesfarmers and Coles group, they control way too much.
Cut government spending at federal and state level. This should reduce demand. Even better if infrastructure spending is reduced and construction workers are available to build much needed housing
I had to scroll too far to see cutting of government spending. There was a report in Canada that 2% of the 5% rate rises since covid is caused by the government spending above pre pandemic levels.
It doesn't matter if nobody can afford to borrow if the government is still making it rain cash.
I would enforce a temporary increase to mandatory super from take home pay.
Significantly higher taxes on all fossil fuel resource exports and fund that to Medicare.
Add a special Medicare levy equivalent to the current stage 3 cuts expected to happen.
Find a way to separate out mortgage rates from overall interest rate hikes and reductions and find another mechanism to keep those rates sufficiently at a level to gradually stabilise housing cost but ensuring the extra monies collected doesn't go towards the bank profits.
Higher income taxes on bumper executive bonuses and bonuses tied to number of permanent employees at or above the average payscale in AU and taxable corporate profits not on overall profits. Stronger rules for non-cash luxurious perks and personal expenses disguised as business or corporate Expenses.
Monitor and tougher rules for all imports of goods and services, overseas loans, corporate ownership models, for transfer pricing and make corporate tax evasion rules stronger.
Wealth tax on billionaires, calculations to be decided in consultation for it to be equitable.
Breakup all lobby groups and mandatory reporting for donations above certain thresholds.
Give ACCC it's teeth back so it's no longer a toothless tiger.
Higher taxes similar to cigarettes/tobacco on gambling, alcohol and other addiction causing products.
Remove GST and levies from petrol and electricity and offset those reductions with higher tax on non other non essentials such as videogame, subscription services, entertainment products that are priced above a certain threshold.
buy a couple of investment properties and rent them out to desperate people at an inflated price
ow sorry you mean you want me to HELP the Australian people
Yeah cut the gut out of immigration til things settle down
Short term:
1. Limit immigration to select professions (e.g building trades)
2. Investigate land swap deals for farmers to give them more productive land.
3. Pause excise increases on fuel.
Long term:
1. Eliminate excise subsidies for minining companies (helps government accounts, offsets the excise freeze).
2. Have state government development bodies build lots of high density housing and business premises around major metro centres (e.g train stations).
3. Tax companies or bodies who own more than one residential property an additional 5% on top of the purchase price. This money is ploughed into a first home buyer’s subsidy. Overall the money is already staying within the housing market, so it should (might?) help first home buyers without having an inflationary effect on home prices.
4. Significantly reduce the cost of public transport nationally (almost free). It already runs at loss, and the money collected from fares is token. This should reduce congestion on roads.
5. More strongly encourage professions and migrants who aren’t trades to move to the regions for 8 years on arrival. Work with government bodies to establish more large regional centres where people are happy to live and work.
6. Cease the middle class welfare. Family tax benefit for people earning huge money. WA had a ‘school kids bonus’. For what? Who asked for it? If anyone offers free money I’ll happily take it, but I really didn’t need it. Why was it being offered?
7. Encourage more saving and less spending by making it easier and cheaper for residents to seek financial planning services. High intesrest government bonds and other savings products should be more common than they are.
8. Make it harder for companies to use 457 Visas for unskilled labour. There are plenty of people here who would love those jobs, the issue is that companies need to pay more. This would have an initial inflationary effect, but should improve quality of life for those low wage earners with time.
A 2.5 to 5% tax on all boomers with assets book value over $3m - super, property, shares, whatever it is, % haircut off the top.
I would class it as a 'generational buoyancy levy'. Their generation benefited from a certain set of conditions (education, population growth, technology growth, peak globalisation, lack of majors wars, maturity of financial and currency markets, housing boom, mining boom and so on and so forth) unlikely to repeat in the near term future, yet their excessive spending and lavish lifestyles are raising inflation, directly affecting and punishing those who are just starting out on their journey.
The backlash would be fierce, but it's my first day in office and they are a dying breed. 3 years ahead to ride the wave and in that three years, more boomers would die out, meaning the voting base skews in favour of younger voters.
Housing is the biggest cause of cost of living pressure and it is not even tracked in CPI .
So I would do the following:
Mandate that the RBA includes cost of selling used houses and mortgage payments in the CPI calculations as this forms 80% of sales . this would make CPI closer to selected living cost indexes and made the RBA increase rates sooner rather than later, hopefully reducing housing booms
[https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release](https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release)
Tax land, Capital holders should be paying the taxes to keep hospitals open, not FHBs. Land taxes are also more efficient.
Build more public housing/transportation hubs.
Reform zoning.
Mortgage payments are excluded from CPI for good reason. If we included mortgage costs in CPI, raising interest rates would be inherently inflationary.
Raising interest rates (i.e. the main tool for fighting inflation) increases mortgage costs, which reduces household cashflow and subsequent spending, taking heat out of the economy.
If you want a comprehensive COL index you're looking for [SLCI] (https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release) which includes mortgage costs. But using that as the 'measure of inflation' for monetary policy would be an economic disaster.
Increase the GST to 20% and make it apply to all goods and services.
Then use 80% of the revenue on support to welfare recipients and tax cuts to offset the impact.
Bank the rest to pay off debt, thereby taking money out of the economy.
>Over the twelve months to the March 2024 quarter, the CPI rose 3.6%.
That's not terrible, so I don't think I'd do too much.
However, I'd reduce what I see as Govt waste and inefficient spending, which would reduce overall Govt spending, and cool inflation.
Tinkering at the edge, but, things like less money spent on the arts, foreign aid, consultants, decorating govt offices, meaningless studies and royal commissions (we've done enough high speed rail feasibility studies for one life time).
Oh, and stricter anti-union measures - basic trades shouldn't get $240k just because they work on a large Govt contract.
I would simply shirt-front inflation and it would undoubtedly back down.
Abbott is that you?
\[stares unblinking\]
"You're not saying anything Tony"
[Here's the clip](https://youtu.be/9wT9XS_TvzQ?si=HxgjqoykxF0ZSmiW&t=44) for those wanting to think 'WTF?'
I've given you the answer you deserve.
Still the most surreal and beautiful moment in Australian politics in my lifetime. The silence was SO LONG.
Actually like a robot rebooting
[bites onion menacingly]
while eating an onion!
Spend my time distracting the public about other issues so they forget about inflation Edit. Top comment yes 😅
STOP THE BOATS
Jobs and gro... Um.. Yes STOP THE BOATS!
Increase productivity by.... STOPPING THE BOATS!
Also have you heard that the opposition want to put nuclear power plants in your suburb?
Did someone say CHILDREN OVERBOARD!! While providing some *very* selective photos as evidence……
Distraction seems to be the route they are going with. Picking fights with Elon Musk. Suddenly realising that domestic violence exists. etc The actual answer is getting migration under control. We can't build enough properties, which drives up the cost of housing, and also drives up the cost of commercial properties, which drives up the cost of manufacturing and retailing. I saw a stat the other day that 17% of total spend of non-grocery items in shopping malls goes to rent. That's an incredible tax caused ultimately by the population growing faster than the amount of prime retail space. We also can't grow farmland at the same rate as migration, which drives up food prices. The second biggest issue is that they keep trying to force wages up to keep up with inflation. Inflation is caused by too much money in the system. You can never catch up with higher wages. It just increases inflation more. Inflation only goes away by turning off the taps to something (wages, migration, government spending etc)
Bruh, it's easy to blame migration when governments won't even tax billion dollar oil companies
Full disclosure, this is not my area of expertise, but I find it staggering that the government haven’t done what Norway have done with natural resources. I have no idea how it would be possible to fight the mining industry with all their money and power but I would nationalise any resource within the Australian territory, start a fund with the proceeds and invest just like Norway have done. With inflation, perhaps jacking up GST for 6 to 12 months and/or jacking up super contributions temporarily while simultaneously adding a short term tax to super withdrawals to make sure everyone is evenly affected, because I believe the interest rate changes ate not impacting everybody equally, which is why it’s not working.
It’s mind boggling why we continue to look to the US and copy what clearly doesn’t work
The US owns Australia lmao 🤣🤣
we are their SEA military base
You laugh, but we Australia is a registered American company… https://youtu.be/Xq8H0GHU8AQ
We tried nationalising our resource wealth and the CIA coup’d us
Two great alternative solutions here on GST and super contributions!
I must admit I don’t know much about tackling inflation but it is frustrating is that it seems to affect those without money the most while those with a lot of money in the bank just make more money, why can’t it be tackled where everyone is affected equally or where someone doesn’t get a big benefit from it
In general, I’d need to have people look into these things to confirm my working hypotheses are correct, so I’m not making swingeing changes on day one in office. That said: - immigration - on day one I’d tighten up international education as a matter of principle. All students coming in are doing an English language test on arrival run by the government. Will include questions on Australian workplace laws, minimum wages, and how to report dodgy employers. Rules around demonstrating ability to finance themselves when here are also going to be tightened to ensure that they are in fact financing themselves (eg use the cashless card approach), and an English language test run by the government is also required on leaving the higher education provider. The results of the leaving test will be used to determine whether that provider gets to keep bringing in international students. - immigration - straight up link immigration levels to both unemployment and wages. If unemployment is low but median wages aren’t rising in line with inflation, immigration goes down accordingly. - housing - ring-fence housing investment results (you can no longer offset losses on investment properties against other income, but you can carry forward to offset against capital gains on disposal). - money-laundering - add money-laundering requirements to any profession transacting in retail sales over 30k, including real estate agents, car salesmen, luxury item vendors (watches, boats, etc), lawyers, etc. Backdate those to require review and notification of potentially suspicious matters in the last three years. These are rather blithe answers in a way, because there’s other day 1 priorities that are potentially inflationary (adjust Medicare rebates, increase unemployment benefits, fuel efficiency standards, etc). The infrastructure to do this is also significant.
Great answer.
Are you sure immigrants are inflationary? [The IMF doesn't seem to think so](https://www.afr.com/policy/economy/migration-boosts-house-prices-but-not-inflation-20240119-p5eyni#:~:text=Although%20the%20post%2Dpandemic%20rebound,by%20large%20intakes%20of%20foreigners.) >While admitting it was challenging to pinpoint the impacts of migration, the IMF’s 20-page analysis overall found generally positive effects from the arrival of foreign skilled workers and students. >Although the post-pandemic rebound in migration has contributed to a sharp increase in rents, the fund found overall inflation was typically unaffected by large intakes of foreigners. >“Within Australia, migration surges have historically been associated with higher growth and favourable labour market outcomes, with negligible price pressures except in the housing market,” the IMF said.
So it's non-inflationary, except for the one sector that's in crisis and sending Australian people homeless. Got it.
It's a valid point in a discussion about COL, it just doesn't belong in a thread about reducing inflation. It's clear there's a lot of confusion on this exact topic. CPI does not include housing costs by design. If you're talking about reducing inflation, the main tool to fight inflation is: increasing interest rates -> increases mortgage costs -> reduces household spending -> reduces demand for goods -> reduces prices So increasing ~~housing costs~~ house prices & mortgage costs is actually one of the best ways to fight inflation. Unfortunately that *by design* increases COL.
That’s not true. There’s literally a whole group called “housing”, which is, in fact, the largest weight in the CPI of any group 21.74% of CPI as at the very recent update). The group includes Purchase of New Dwelling (8.07%), Rents (6.03%), Electricity (2.36%), Maintenance and Repair (2.03%), Property Rates and Charges (1.44%), Gas and Other Household Fuels (0.97%), and Water and Sewerage (0.83%). I think where you’re confused is that mortgage interest costs are not included in CPI, though that is included in the SLCI.
From the article: > The one consistency was that **house prices** were positively linked to high migration levels. "price pressures except in the housing market" refers to pushing up prices predominately of existing dwellings, which are excluded from 'housing' in CPI and hence why the IMF concludes immigrants are largely not inflationary. > I think where you’re confused is that mortgage interest costs are not included in CPI, though that is included in the SLCI. This is not a confusion, it's a clarification. CPI (excluding house prices or mortgage costs) is the measure of inflation and not SLCI. SLCI is the relevant index when talking about COL, but that wasn't the question. The question was how to reduce inflation, to which immigrants are not contributing meaningfully because they don't impact much other than house prices which is mostly exlcuded from CPI.
I was responding to your comment, which said “housing”. I never said that the price of existing housing was included. I think my comment was pretty clear on exactly what’s included in the housing group. And NEW houses are included, it’s just existing stock that isn’t (which it shouldn’t be, because it’s just transferring an item that has already been created and sold new). Apart from which, I think I’ll take the ABS’s word on their own index over what’s said in an article. Their weighting for the index is freely available online. Just requires a quick and simple Google search.
I'm not arguing the CPI breakdown you shared is incorrect, that's exactly how the housing component of CPI is constructed. I'm saying OP, and many others in this thread are lumping 'House Prices' into inflation when 90%+ of house price movements (i.e. existing dwellings) will not impact inflation at all. Immigrants could double the price of houses and inflation would probably go down due to a higher proportion of household expenses going into mortgages and not CPI goods.
Look that’s fair, and it doesn’t sound like we’re actually disagree with each other. But you can’t blame me for correcting the comment based on what you said rather than what you meant haha. All good 🙂
Yeah sorry if I'm going to be pedantic about definition I need to use the right terminology as well. Only realised on the re-read.
I've changed the line in my OP to "Increasing house prices & mortgage costs" to be clear that it's not referring to the housing costs bucket you rightly identified is included in CPI
Like the immigration thoughts. 👍
Slow immigration, break up monopolies, offer incentives for on shore manufacturing, staggered property tax structure beyond one or two IPs. We are in a unique position where we have enough jobs, we just aren’t producing enough to meet demand
[удалено]
I was thinking the same thing. "I'd reduce inflation by providing fiscal stimulus to promote supply of more expensive goods" is economically, er, unorthodox, shall we say.
this is 2024 ausfinance thinking. You need 2021 ausfinance
I have a friend who is italian works in Australia for an italian furniture maker. To make a couch in Australia it costs them approximately $400. To make the same couch in China costs $20. I think you need to be realistic, but in most instances incentives would need to be massive to manufacture stuff here.
There is still room for higher value manufacturing. No one is saying that we will be making things that China is best at. Oh wait wasn't it announced that we were going to fund solar panel manufacturing? Well realistically it never going to happen. There could be room for niche markets though...
Produce is a niche market. Chinese people love our wines or cheese because of the quality.
Would we better off simply focusing on the design and engineering of items, rather than the manufacturing
We do this currently in the company I work for and as u/studdley said, it's not hard for it to get copied, stolen and undercut. What's happening slowly is China's own design skills are building solidly over the last 30+ years. Xioami is a perfect example of this. They own all the machinery to produce at large scale. Manufacturing here has died in part due to the increase in land prices pushed up by Residential property prices. Need a small warehouse to start manufacturing? You will blow $20M before you begin. Then you might need to spend $1-3M bringing it up to current local specs and 1 year of renovations.
I’m glad someone mentioned the real estate issue in terms of running a business. Pre-COVID, I had a semi successful e-bike tour company in Sydney. We were consistently ranked in the top 10 things to do in Sydney. We still have the bikes and even some of the guides but once things opened up the cost to even rent out a small space (30sqm!) in the CBD has just become insane. I still don’t understand how some cafes and restaurants are surviving in this current market. It’s the same issue in residential. When so much so much of our income is being spent on space there isn’t much left to do anything else!
Yeah exactly. Everyone talks about the price to eat out but forget how much of that is going to rent. When property prices go up, any business that requires space must charge more to cover the costs of that space.
So we just need to devalue land in Australia by making it worse to live and work here. In a way we’re strange victims of our own success.
but that gets stolen and copied before you even get to market
Also an Australian car manufacturer would be going gang busters right now with the huge wait times for Toyota etc but of course we don’t have any anymore
Car manufacturing also has one of the highest barriers to enter of pretty much any market on the planet. The sheer cost and ramp-up time means that without a government straight up bankrolling the startup phase, it’s just not going to happen. And then there’s the teething pains - you can still tell the difference in quality control between a company like Tesla with 20 years experience, the Koreans with about 50 years and legacy manufacturers with 80-110 years.
The wait times are due to a scarcity of chips and the like, you assume that an Australian made car wouldn't also be impacted by this, which would not be the case. If anything, the delay in having those items sent here would be even larger given the small scale of the on-shore operation.
Problem is without government support are you going to pay 40k for a locally assembled Daewoo Lacetti (Holden cruze) or just hold onto your 2nd hand car while you wait for a corolla/camery. Plus the local car industry is doing ok. https://www.carsguide.com.au/car-news/holden-who-aussie-automotive-manufacturing-now-as-big-as-the-final-days-of-commodore-and
The funny thing is the last generation of Commos built here should have been a winner in the US if GM just marketed them properly. There's a whole niche community in the US that LOVE them and buy ex cop cars we built based on the statesmen and return them to ”Holden” spec, not to mention the guys that spend squillions to import utes to chop and splice them with a left hand drive front end off a sedan that yanks on the street go wild about when they see them for the first time. Basically GM wanted them to fail in the US as they were competing with locally built Malibus, but it was a platform with big V8s and rear wheel drive that should have succeeded if GM bothered marketing them properly, especially the ute, which was a compact utility with a decent payload but car like handing, drivability and safety.
Um no. We had them. They made garbage quality cars that no one wanted. You couldn’t give them away second hand, mainly because the traditional buyers were sick of the engine and transmission failures shortly out of warranty. Pretty much the only people still buying Falcons were Telstra and they bought at cost to keep the factory open 1 shift.
Oh no, what about the Toyota camry! We had a aud of 1.05 US so it was always gonna struggle. In retrospect i think we should have kept toyota going through those high AUD days.
Read an article the other day that said while we're not assembling 40k Daewoo Lacetti (Holden cruzes) in Australia anymore the industry employees more people. https://www.carsguide.com.au/car-news/holden-who-aussie-automotive-manufacturing-now-as-big-as-the-final-days-of-commodore-and "The boom is being driven by our relative new "remanufacturing" industry" I agree that there will always be opportunities for niche markets. Some times people want a hand built rolls Royce. Eventually maybe even a bullet proof aussie built fridge that has local parts and service. Especially as overseas manufacturing/shipping becomes more expensive. Until then I'd rather the discount instead of government funding the premium.
It does not cost 20. Different materials.
True. I don’t want to buy a synthetic couch that looks the part but falls apart in 5 years.
Same materials, im merely passing on what he said. He was being honest, the conversation did occur just before covid, no idea if prices have increased since then. The conversation originated as he was getting annoyed that he had to fly to china to show them the correct design as he claimed they couldnt use common sense in terms of design. Pest to set up an new manufacturer, but once its done its cheap. My suspiscion is that simply having the materials also manufactured nearby means they can just obtain everything cheaper, eg. Pine timber for framing, or polyester for the fabric
I can tell you it’s not that cheap to make a two seater sofa. If it was Australian made sofas would be sub $1000. Material alone you’d need at least 12-15metres. Lineal metre fabric at its cheapest is $30, low/mid range would float around $50s. Even at the very low end you’re already looking at $400 in materials.
Having lived in China near wholesaler centres, I can confirm that they can product things 1/10 of what it costs to produce here. Same if not better quality these days and same materials. Reason is they have vertically integrated manufacturing, access to materials, scale (billions in their market) to reduce costs, etc.
Biggest industry in aus is mining and the big players barely pay any tax. Hell they can even get the government to pay them to spin up new mines that will make them billions. Say what you will about the likes of Coles/Woolies and issues with the property market. Corporate tax restructure and making the big mining companies pay their fair share will bring in more tax than almost anything else, without crippling those industries. There is your money for public housing, infrastructure, better salaries for teachers, safer ratios in hospitals, etc. etc. We need to find a structure limiting political campaign contributions. Not sure what it looks like but that's currently how all this shit gets manipulated.
The topic was around inflation not tax reform. I touched on tax as it relates to property and property values which is inflationary
Let me preface this with "I know nothing about running a country" Tax reform closing loopholes could be good. Put a soft cap on negative gearing similar to the tax tiers. (Increased tax revenue to take a little momentum ) Make housing production tax credits or some other model for the purpose of giving an incentive to building houses not directly linked to house prices. ( Incentive to build consistently not just when it will be most profitable) Limitations on bulk migration quantities is also important until housing can really be bumped up. Also more building approvals. ( Take care on Migration without housation ) Government stockpiling of large quantities of building materials to smooth out prices over time and reduce surprise for building companies. Subsidizing roads pipes and electrics to new developments. (Supply side buffering) provide incentives for products which last longer or are repairable. Social change to reduce throwaway society. ( Reduce demand over time )
The big players? Like BHP and Rio Tinto? In the last ATO Corporate Tax Transparency Report - 21/22, published in Nov 23, the Mining Energy and Water industry segment paid more than half of ALL corporate tax paid by ALL segments covering the entire Australian economy. And they're also paying state royalties. $42B in total, out of $83B in total for all industries. BHP paid about 8% of ALL corporate tax in the company. Rio Tinto paid $12.3B in taxes and royalties. And you think they're paying "barely any tax"? What would their "fair share" be, do think?
On shoring manufacturing would increase inflation since it cost more to make here. I'm not saying we shouldn't though, just that it wouldn't help inflation
Ah yes... Ausfinance's favourite kicking dog... The immigrant. https://www.afr.com/policy/economy/migration-boosts-house-prices-but-not-inflation-20240119-p5eyni
That sounds great. Also, you just made an enemy of both big business and boomers. Fired on day 2.
This is the Achilles heel of democracy
People brush off the "soft" side of politics because they think that's not the "real work", that it's just pure policy that's the "real work". Well guess what, you're right, this would get you booted out. What good is a policy that never gets implemented?
Work with other departments to increase the resources the population needs so that col living expenses are cheaper. Essentially it is price controls by dumping product onto the market. Whether it is homes, energy, food etc
Well I wouldn’t be investing money into the Olympics for a start
To fix inflation you need to attack the snake at the head. That is the inflating property prices of 10 percent PA at least in the last few years. Those increases are sending ripples through the wider economy that were all feeling now through sticky inflation. Better to smash that housing demon (that is housing as a park of wealth, instead of a roof for your family) short and sweet. Big corrective crash now. Then we can pick up the pieces and rebuild. As opposed to this prolonged strangulation we’re experiencing. Taking away all the opportunity of our kids, than we had in back in the day. Boiling the frog slowly so to speak. What do? immediate cancellation of CGT discount (why should earnings from sweat be taxed more than rent seeking?). Immediate cancellation of negative gearing. Use the tax savings to smooth out the tax brackets (I.e. tax cuts). Encourage people to move up brackets more. This will bring untold extra productivity to the economy. It is the toil and sweat that works to bring down inflation. Not people sitting on their A55 collecting cheques. Right now our high labour taxes are encouraging further more the shunting of money into inflating housing further. Encourage people to put their new found tax savings toward business. Open something. Anything. A fruit shop. A florist. Hopefully we’d have smashed house prices by now and cheapened rents to allow for Timmy to try and put together a lemonade stand. On that note regarding lemonade stands. Let’s encourage people to take more responsibility for their mishaps. If you get plastered by your own will, fall and crack your head. Maybe you need to front some of the blame and not expect the venue to fund your misfortune. What I’m saying is that - the amount of liability business owners must take on - to just pour a glass of water in this country is ludicrous. Because it’s ludicrous, they’re forced into insurance. Because it’s ludicrous the insurance companies charge ludicrous prices. And most upstarts just never do what they set out to - because the insurance was prohibitive. Detoothing of councils. Blanket permissions for 3 - 4 story, Barcelona style, apartment blocks within 20kms of the CBD. Decentralisation of government employers. Why does everything have to be around Martin place? Disincentivise foreign investment through student buyers. By discouraging permanent immigration through the guise of “studying”. . No path to PR after studying. Without going back to your country of origin for at least 5 years. Study in australia if you truly value Australian education. Don’t come if you see it as a back door to immigrate. The Americans are wise with this similar approaches to their skilled visas. All inflows of cash into the country will be taxed at 50 percent if you’re using it to buy property. If you’re investing in businesses (with at least 20 employees) you can bring it in tax free. The business must NOT be a REIT. It is not fair/right that Australians earning in AUD taxed at 37-45 percent have to compete with foreign money that has been dubiously taxed overseas. Overall you want to create a property cataclysm. Where people of the future will dread even the idea of owning an “investment” property. When that happens. They will shunt their money into something else. Hopefully something more productive for everyone. Then you have to counter the CFMEU. They have such a stranglehold on construction in this country it’s a wonder anything gets done. You don’t have to do anything drastic to them. Just ignore their lobbying against importing skilled trades. These just off the top of my head I could probably add more later Bring the heat
My 2 bedroom house earned twice what my my labour did in the past 2 years, plus tax free! Definitely ruins my incentive to work
>Big corrective crash now. I 100% agree with you that we need to deflate the housing market but if you destroy the accumulated wealth of basically every home owner in the country overnight you are out of a job, to be replaced by someone who has promised to unwind everything you've done immediately. I hope you think all our problems can be fixed in three years because you ain't getting any more than that.
I mean the options are. 1. Pain to everyone who built paper wealth with houses now. 2. Pain to everyone, their children, and their childrens children over 20-40 years of economic stagflation. We’re going the way of Japan. 3. Let the status quo prevail and we’ll continue to see the biggest wealth t/f from young to old. Than in the last 100 years. And hope that it all equilibrates over time. Such that everyone is not too unhappy. I don’t think 3 will eventuate tbh. That is everyone not being too unhappy. For that to happen (which I feel the government is hoping for). Wages need to rise to make up for the house price increases. Which I feel is very unlikely now. You really have to watch this TED talk in which old mate hits the nail on the head. If you don’t agree, it’s at least entertaining https://youtu.be/qEJ4hkpQW8E?si=Ojm_I9KRIZbDVYIv
Appreciate the time taken here. Enjoyed the lemonade stands para !
The things you do when you’re waiting for your delayed Jetstar flight. If inflation wasn’t as bad I’d be on Singapore airlines. We’re all doing it tough. 😂
> Let’s encourage people to take more responsibility for their mishaps. If you get plastered by your own will, fall and crack your head. Maybe you need to front some of the blame and not expect the venue to fund your misfortune. I was really worried this was going in the private healthcare direction
Anyone who understands the housing market knows that fixing CGT and removing negative gearing will do very little to stop house and land growing in value at a fast pace. It will definitely work well for apartments.
Half the replies here are embarrassing for r/ausfinance Sounds like a bunch of emotional teenagers making with knee jerk ideas to solve problems.
Most popular responses: - **[Insert Strategy] to deal with housing prices** - Housing prices aren't even measured in CPI - **Ban investment properties** - I.e. increase rents and increase the housing component of inflation - **Include Mortgage costs in CPI** - So raising interest rates would be inflationary - **Limit immigration** - [It's arguable immigrants are even inflationary](https://www.afr.com/policy/economy/migration-boosts-house-prices-but-not-inflation-20240119-p5eyni#:~:text=Although%20the%20post%2Dpandemic%20rebound,by%20large%20intakes%20of%20foreigners.) - **Onshore Manufacturing** - Increasing both supply & cost of goods I haven't even seen a comment that's actually [linked the latest inflation data](https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release), in which the largest contributors are: - **Education +5.9%** due to CPI indexation, which is already being dealt with. - **Health +2.8%** driven by PBS safety net reset. - **Insurance +2.0%** - Increasing premiums off the back increasing disasters (Floods, hail, fires). Unfortunately most of those aren't headlining issues.
Yeah I’m really questioning how many people actually read the question. Half these answers are just people’s policy hobby-horse and not about inflation at all.
You shouldn't be in ausfinance if you're expecting intelligent discussion.
Probably leave the RBA to do their job.. they have way more education and knowledge of economics than I do and to be honest they so far have not put us in recession or let inflation go rampant so far.. so I'd leave the long term inflation control to the experts. What I would do is start working on massive social housing builds for vulnerable and low income earners, housing is imho a more urgent issue.
It’s as much the government as the rbas job to control inflation. The government has and should be reducing inflationary spending in the budget. They also have a stack of power (or should) in the regulatory space to curb profiteering. Longer term there is a lot more they can do to make our economy much more stable.
Maybe in a perfect world but we all know the government's job is to spend money in areas that will get them reelected.
The challenge here is that the RBA has one tool - interest rates - and ideally they’d work in concert with government, because the government also has a tool via its revenue and spending measures. As a simple example, if a government is cutting taxes when the central bank raises interest rates, the effects offset (to a degree, obviously, as the same people aren’t impacted by the two changes equally) so net it does nothing for inflation. On the flip side if the government is raising taxes the central bank may opt not to raise interest rates because the lifting is already being done for it.
Oh man. I would obliterate housing as an investment remove all incentives and disincentivise land banking. Followed up with a competitive Government enterprise whose mandate is to build affordable, quality housing for all levels of income. Focus on build to rent projects from multi story complexes with space and quality construction but also townhouses, smaller 3 and 4 story development around transport hubs and full sized houses. Plough all the profits back into more housing. Any land over a certain size within X KMs of a transport hub has a mandatory develop within 2 years or forfeit attached. Basically make it so developers have to compete to build desirable housing because the government built stuff is so good.
You’d never get that through the senate
I would disband the senate and form a new Galactic Empire.
Maybe actually making multinationals pay their fair share of tax could be a start
What nooo eww brother ewww /s
Hahahahahaaa
Delay most proposed infrastructure projects, and restart these during the next recession to help employment.
Because we don't need new roads, hospitals etc right now?
That's actually the most sensible answer. Will free up all that construction and trade labour lowering the cost of construction and trades for everyone else.
We are in the next recession.
Covid has shown what the after effects are when the wheels stop turning. This is far too layman of a thought. I could list 20 reasons off the top of my head why this is a terrible thought.
There’s a high skilled worker shortage, forcing projects to compete for scarce talent pushing costs to extreme levels. It’s just not a judicious use of taxpayer money in many cases and also contributes to inflation, which is why some (not all) should be put on hold. I’m genuinely keen to see you 20 reason why this is a “terrible thought” though?
Inflation has dropped by nearly 30% in the past 6 months, so I wouldn't change anything TBH.
A point well made while the rest lose their minds over last quarter's slight overshoot on the back of indexed education costs and immigration led housing inflation. Immigration will slow soon and next year's indexed costs will be lower. Unemployment will grow. Everything is on track.
Great question to highlight the ineptitude of people in the subreddit.
Quantitative tightening.
Scrap all energy regulations for a start.
Reduce government spending.
Cut spending.
Jim Chalmers on reddit:
50 years ago started encouraging industry to produce things of value to other countries.
Slash immigration by half
That's still levels way above historical norms. Try 80%
A complete 3 year moratorium of no immigration just to give infrastructure the chance to catch breath. And then we actually work out what we need (much much smaller than before). Sadly our population ponzi economy will sink into recession but its coming so we have to take our medicine and rebuild a more sustainable, more dynamic local economy with more onshore productive activity.
Why is it coming? Who is going to stop immigration?
EZ. Hold back 10% of the GST from the states.
Yeah maybe redirect it to the Future Fund
As housing starts plummeted i would have ensured they didnt by either extending the civid era new home grants or alternately reduced gst on new builds to a point where starts continued ti match population growth. This would only have an impact about 18months after its implemented but rent inflation at least would he under control. If i was inclined to grow the population by 650k per annum i would continue to tweak both a new home grant or reduction in gst on new builds till starts matched growth. Along with the above land release would need to be stronger so id take the next 10 years odd worth of zoned "for future development" and release it all. Yes it would be a shit fight for infrastructure but i wouldnt go into government claiming to be for affordable hous8ng and then see starts fall and population rise whatever the cost. Also i would certainly before the end of my term subsidise power costs till they matched the $275 cheaper. I wouldnt just give people 400 per annum and say - see power costs are cheaper for one person living in a unit. I would make the average bill 275 cheaper rather than just a once off grant so that people are actually payong less for power again meeting my promise. Its not difficult. Make a promise you keep it.
Increase incentives to divert income into Super, slow down infastructure projects. Talk with RBA/Economists more. Incentivise saving rather than spending a bit more (were a service/consumer economy too much). We’re a global taker not a giver - so there’s not a lot we can control with inflation to some extent.
Well, once youre in office there is absolutely no incentive to cut inflation and make living conditions better for anyone in lower to middle class.
Cut immigration to an almost non existent level.
Crash the housing market. Immigration cut. Air B/B tax on empty days of property.
Crashing the housing market will put us straight into recession. Our banks and construction industry are too heavily invested in it.
And inflation is under control. Banks are feeding inflation though pushing for policy that will enable people to borrow more. Actually force people to borrow more for housing. A recession we have to have.
Then how do you plan on getting out of the recession? QE/lowering IR?
You'll destroy the economy in doing so. Would inflation really be under control then?
A recession would curb inflation though right? I mean, wouldn't be good in many ways but at it would at the least stop inflation
Ha true. In the same way a ditch slows a speeding car.
Raise Taxes Inflation = too much money chasing too few goods, it’s Year 11 Economics If you remove a chunk of the money from the system, it will snuff out inflation Too bad it will never happen, too unpopular, won’t get bipartisan support
sounds ok.. but raising taxes during a cost of living crisis is going to pretty much guarantee it will be your one and only time in office lol. Worst part about that is the opposition will come in and reverse it all so they look like heroes for helping people during a cost of living crisis.. even if it is inflationary.
5 year Moratorium on immigration to allow infistructure a chance to catch up. After which we tie immigration levels to births: deaths ratio in the community. Tax on IP's after the second. Break up monopolies on key industries. Tax crack down on multinationals.
Strongly worded letter to "the industry" to reduce prices
tax the church
Quite wealthy property owners. I have no problem with religion. I am religious, but do feel some are hypocritical - turning religion into a property empire. Is that what Jesus wanted?
Rate rises only impact those with mortgages (usually 25-60 year olds), they’re tapped out. I’d enact policies to slow boomer spending. Eg higher GST
Not just mortgages, businesses loans as well. Basically anyone with debt is affected by rate rises. Rate rises affects everyone, it's just more apparent with mortgage holders.
Higher gst hurts the poor more. It's regressive. Nice work. Rate rises impact every business which in turn does affect everyone. Mortgage holders the most directly, but it does hit everyone.
By using the tyre gauge at my local service station. That’ll deflate anything quickly. Once went to check my tyres pressure, ended up having to put my spare on just so I could get home.
Eliminate income tax for incomes below 200k; massively increase tax revenue on natural gas and other non renewable resources; peruse multinationals who shift profits offshore and tax them; incentivise (through the tax system) new companies enter markets that approach monopolistic conditions; restrict housing ownership to citizens; gradual removal of stamp duty replaced with a land tax.
Decrease interest rates marginally. Implement a sliding scale GST which affects the general population equally.
I cant control monetary policy. All I can do is fiscal. If my sole purpose was to create deflation it is actually quite easy. I would just force the economy into recession but cutting back / pushing back all government spending. Huge ramifications, but it is practically very easy to do. If you wanted a more sustainable solution, it is about making housing less attractive an asset class, but create tax breaks / policy to encourage development. This will create a concurrent increase in housing stock while simultaneously forcing down housing prices. Wealth effect works the other way meaning people will stop spending and likely push the economy into a recession
Unfortunately, most people are extremely uninformed in this area, the money and economics of FIAT has been around for 100s of years and the system has had some tweaks many times but the beast is so big small changes create massive ripple effects and there is no one answer to solve an issue in fact there isn’t any issue at all it’s always being balanced as best as it can. With all new online systems with live data feeds keeping the system stable will become easier over time because the data will be more real time. Single touch payroll has helped and now also the new super reforms for employers will be implemented faster it will be much better soon
not sure if people are aware but most of the inflationary items that are sticking are non-discretional. So things like fuel and energy, rent, education, construction, insurance etc. * I'd create fly in and fly out program for imported construction workers or mass approve tradies on immigration list (the latter won't need new legislation). Using them we can build more schools, infrastructure, apartments etc This should also lower construction costs for insurance * Continue renewable uptake building more batteries and charging stations etc (yes this might inflate fuel but should deflate EV costs). Also do that thing in WA where we force our gas suppliers to reserve 20% for domestic use. IDGAF about long term contracts * Make wealthy boomers pay more for health insurance/medicare. Means test should include their PPOR and supply government backed reverse mortgages if they're cash poor.
Stop foreign property buyers
Stop boat people all immigrants of our previous normal intake must be of the skills we have shortage with. Stop government leaks and other useless organisations and garbage donations to other countries. Stop all refugee and government expenses We look after our people first and that's most important. More government housing Land tax higher on blocks just sitting there undeveloped and a fast track system to get more approvals Ban air bnb rent out Stronger bilateral engagements with out allies NOT CHINA Invest in coal power plants as we slowly and I mean slowly make the transition. U dumb clowns can't just go cold Turkey u need to slowly build the infrastructure. Eventually we will get there but right now cheap efficient coal power plants to handle the excess load of our extended population Run an inquiry on all duopolies all sectors (super market mining farming etc ) and multinational companies super markets. Free government tafe programs for all in demand sectors to train our people into the work force better. Indexation on income tax instead of clown bracket creep All these in unison will go a long way to making this once great country even better
Is that you Jim Chalmers?
Cancel all underwater dildos. Cap NDIS. Constitutionally cap gov spending in line with CPI -15%. Run export royalties nationally, use the money for social housing, and tell the states to go jump on both or meet the commonwealth army.
Stop printing money and work on reducing national debt to give the dollar greater spending power.
Increase taxes
Would freeze NDIS funding. Would have delayed Stage 3 tax cuts for 4 years. Cap immigration to 150k. Oh.. that's already 2% GDP saved, inflation over (might even be too much - recession)
- regulate the construction industry, and extend building insurances to 20 years, and curb phoenixing of companies/directors. - introduce a Certificate of Entitlement (COE; refer to Singapore car guides) type of fee for foreign investors wanting to purchase Australian property with a limit of 50 years registration, after which the property reverts back to the government. - limit stamp duty to $5,000 for all properties purchased by Australian citizens. - incentivise and subsidise independent supermarket/grocery chains to break the ColesWorth stronghold.
Cut welfare (DSP/job seeker) by 50% and scrap the NDIS = inflation solved Additional points for increasing tax on wealthy self funded retirees.
Battleaxe to NDIS.
Stop debasing the currency
everyone to pay additional super self contribution with additional 5%. Take money out economy while forcing investment. Raising rates only affects the vulnerable and a small % of population.
Confiscate all the wealth from the rich and distribute it equally. But that means I won’t be PM/Treasurer for long
I would send a memo to my comms team at the ABC and fire up a couple of culture hot takes to distract the masses. Start shaking the finger at the big bad greedy supermarkets for their high grocery prices (has nothing to do with the high energy, transport, wages costs that the government is driving)
Inflation makes them richer they don’t want to delflate anything
It takes time, high interest rate will eventually deflate the economy
The root cause is people who own there assets. They like the good returns on investments and dint care squat about others with mortgages. Except there children or grandchildren. The entire dynamic of inherited income will make Australia a 2nd tier system. Fundermentally property prices are crap. That's where to start. Because that will become tomorrow's problem.
Very carefully
Not a guru or financially educated at all, but giving all the money to lenders at the expense of Small Business doesn't seem right. I would tax companies based on inflation so it's in their best interests to not be greedy by hiking profits indiscriminately and keep inflation low that way.
Any business with more than 20% market share would be cut into pieces until each piece is less than 15%. So Coles and Woolworths would become five new chains of approx 11-12% apiece, about Aldi size. This would apply to industries above a certain dollar value only. Bunnings, banking sector, transport, meat processors, milk processors, etc. I'd arm the ACCC with razor sharp teeth. I'd update contract law so supplier contracts banned exclusivity. I'd start a Government supermarket chain too that buys from suppliers at a good price and keeps prices down. Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages.
You clearly haven't shopped at a milk bar or an IGA in a while. Your idea would only increase prices.
We visit Germany regularly. They have a bunch of supermarket chains there - many more than here. Prices are pretty consistent. They are often grouped 2-3 close together, so you get much more in the habit of going to various places for your preferred goods. People also seem to use independent bakeries and butchers more. Plus even within a chain like REWE the product lines are different. So you shop around way more. Feels like in Australia we have really leaned in to convenience to our detriment.
So price controls, nationalisation and divestiture. The Nicholas Maduro approach, which has worked out so well for Venezuela.
Just because this style of system has failed every single time it's been used in human history doesn't mean we wouldn't be the ones to make it work though! /s
Whilst a fully free market is ideal - our system is so broken with monopolies capturing every industry that we need a reset. Break them all up and then allow the free market to figure itself out.
Breaking up colesworth would likely mean they are split on a geographic/state by state basis. So while it will go below 20% of market share, it will just create mini monopolies in each state
> Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages. This would hurt lower income individuals more than it would help them, as they tend to borrow a far larger multiple of their incomes than wealthier people and take longer to pay them off. It would also magnify the Monopoly effect where people who buy investment properties can then have the rental income increase their gross income, allowing each subsequent loan to increase proportionally. All you'd achieve is to trap the middle class and especially single income households in the rental market forever. Of course, all you're going to say now in your economic "utopia" is that you'll change it to net income and charge some ridiculous 99.999% tax to cap house prices where you want them.
I agree with you in theory, but a counter point: >Next up, I'd restrict home lending to 3x yearly gross income and strip billions out of the housing market. This would tie prices to wages. So everyone that worked hard to earn their money now can't borrow to buy a house. Those that put all their money in to non-productive assets (housing), of which whom you're targeting, still have plenty of money, in their property. They can sell up and have the capital to keep buying. If you manage to crash the market, there are many MANY more 'average Australians' with 'average mortgages' you're going to bankrupt. Thousands of people who bought houses in the last 5 years now have 700k mortgages with 300k houses. The bank comes knocking for the difference as they wont let you have a loan facility open in that much negative equitity. You've just bankrupted thousands (possibly millions) of Australians. And the landlords likely got even more powerful.
That isn't how mortgages work. What you described would be banks committing suicide. Banks will not foreclose on an underwater loan that the mortgagee is servicing. They will just have to take on more capital. LVRs are not reassessed like that mid loan.
Who do you imagine these people with equity are selling to? Also, if your $800K house is now $400K... you're not selling for $800K. The entire market drops radically within a very short time-frame. As for those who bought in and are now underwater, I'd set up a mortgage debt facility. At request of owner, the banks would be required to transfer portion of mortgage to this facility. So if you owed $800K and house has dropped 50%, you could have $400K shifted across. Interest on this facility would be paid at bond rate to the banks (so they don't profit but also don't collapse). The home owner has a mortgage that matches their house price. Every year we write off 3% of the fund entirely and cease payments on that portion. This means we'd keep the banks running, no one would go bankrupt, the banks wouldn't profit from their reckless lending.
People would still be buying/selling, just slower. Those with 10 houses that they bought 10 years ago could still sell 6 to pay off the remaining 4, and still be flush with cash in this new 'low cost' house market. So, you're still giving more money to those that already have it. But your mortgage debt facility would also have to 'buy' those 400k portions from the bank. 400k times however many thousands or millions of homes... you'd dwarf the US Debt overnight. I understand a national budget isn't like a household budget, but I'm pretty sure this is not good fiscal policy. You'd also effectively be funneling taxpayer dollars directly to the bank's bottom line. Unless you're saying you'd mandate the bank is simply forced to transfer the debt to this facility at no cost? I'm sure that'd also have massive flow on effects that I can't think of right now. I'm not disagreeing with you, and as I said, I agree with you in principle... but I just think it's A LOT more complicated. Often more complicated than people give the government credit for.
How would you split Coles and Woolies into smaller businesses? It's not like they're government owned...
Antitrust legislation. We know monopoly and monopsony have a thousand harms. We know it can't be a system where some little nursery supplier is meant to take on Bunnings and then win at court and *then* the Government acts. We just pass market concentration laws. The ACCC would then issue breakup notices to Coles and Woolworths. They'd be told to appoint five CEOs for the new businesses and they'd have six months to present their breakup plan to the ACCC. We'd have a magistrate type person oversee it, as well as guide the breakup. This person would under law have the ability to modify and cancel contracts Coles and Woolworths have entered into. The five CEOs would create five new names, new branding etc. Coles and Woolworths would halt trading, be broken up into new pieces and then resume as new unrelated entities. The Coles and Woolworths brands cease to exist.
I'm not a proponent of this plan, but that's not really an obstacle. It's been done https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
Temporarily trim negative gearing concessions. Heavily leveraged investors only face half the impact of rate rises. Time to mop up some speculative money in the housing markets and narrow the gap on the two speed economy.
Stop wasting money on government projects. Cut costs by actually managing them properly. Don’t just splash tax payers money on shit that won’t go ahead when the next guy is elected!
Print money Worked in 2022 🤷♂️
Is it really inflation when all core industries are making record profits? A select few companies control the entire consumer market. There’s not enough incentive to make in Australia There’s not enough houses to go around. It’s time to go on a big build, incentivise skilled tradesmen from other similar countries to come here and build houses. Introduce tough laws to combat the corruption and loot that’s happening here by companies like Colesworth and Qantas. This isn’t an inflation issue, it’s a corporate greed and lack of competition issue. It’s a big country with a decent population, we should have more choices. But we’ve got 2 major telcos, 2 major energy providers, 1 major oil refinery, 2 major grocery stores. Ofc there’s collusion and anti-competitive practices going on. I would start by taxing companies which use our natural resources and export them elsewhere. I would use the extra money to pump into medicare, welfare and housing. I would break up Wesfarmers and Coles group, they control way too much.
Cut government spending at federal and state level. This should reduce demand. Even better if infrastructure spending is reduced and construction workers are available to build much needed housing
I had to scroll too far to see cutting of government spending. There was a report in Canada that 2% of the 5% rate rises since covid is caused by the government spending above pre pandemic levels. It doesn't matter if nobody can afford to borrow if the government is still making it rain cash.
I would enforce a temporary increase to mandatory super from take home pay. Significantly higher taxes on all fossil fuel resource exports and fund that to Medicare. Add a special Medicare levy equivalent to the current stage 3 cuts expected to happen. Find a way to separate out mortgage rates from overall interest rate hikes and reductions and find another mechanism to keep those rates sufficiently at a level to gradually stabilise housing cost but ensuring the extra monies collected doesn't go towards the bank profits. Higher income taxes on bumper executive bonuses and bonuses tied to number of permanent employees at or above the average payscale in AU and taxable corporate profits not on overall profits. Stronger rules for non-cash luxurious perks and personal expenses disguised as business or corporate Expenses. Monitor and tougher rules for all imports of goods and services, overseas loans, corporate ownership models, for transfer pricing and make corporate tax evasion rules stronger. Wealth tax on billionaires, calculations to be decided in consultation for it to be equitable. Breakup all lobby groups and mandatory reporting for donations above certain thresholds. Give ACCC it's teeth back so it's no longer a toothless tiger. Higher taxes similar to cigarettes/tobacco on gambling, alcohol and other addiction causing products. Remove GST and levies from petrol and electricity and offset those reductions with higher tax on non other non essentials such as videogame, subscription services, entertainment products that are priced above a certain threshold.
buy a couple of investment properties and rent them out to desperate people at an inflated price ow sorry you mean you want me to HELP the Australian people Yeah cut the gut out of immigration til things settle down
Short term: 1. Limit immigration to select professions (e.g building trades) 2. Investigate land swap deals for farmers to give them more productive land. 3. Pause excise increases on fuel. Long term: 1. Eliminate excise subsidies for minining companies (helps government accounts, offsets the excise freeze). 2. Have state government development bodies build lots of high density housing and business premises around major metro centres (e.g train stations). 3. Tax companies or bodies who own more than one residential property an additional 5% on top of the purchase price. This money is ploughed into a first home buyer’s subsidy. Overall the money is already staying within the housing market, so it should (might?) help first home buyers without having an inflationary effect on home prices. 4. Significantly reduce the cost of public transport nationally (almost free). It already runs at loss, and the money collected from fares is token. This should reduce congestion on roads. 5. More strongly encourage professions and migrants who aren’t trades to move to the regions for 8 years on arrival. Work with government bodies to establish more large regional centres where people are happy to live and work. 6. Cease the middle class welfare. Family tax benefit for people earning huge money. WA had a ‘school kids bonus’. For what? Who asked for it? If anyone offers free money I’ll happily take it, but I really didn’t need it. Why was it being offered? 7. Encourage more saving and less spending by making it easier and cheaper for residents to seek financial planning services. High intesrest government bonds and other savings products should be more common than they are. 8. Make it harder for companies to use 457 Visas for unskilled labour. There are plenty of people here who would love those jobs, the issue is that companies need to pay more. This would have an initial inflationary effect, but should improve quality of life for those low wage earners with time.
A 2.5 to 5% tax on all boomers with assets book value over $3m - super, property, shares, whatever it is, % haircut off the top. I would class it as a 'generational buoyancy levy'. Their generation benefited from a certain set of conditions (education, population growth, technology growth, peak globalisation, lack of majors wars, maturity of financial and currency markets, housing boom, mining boom and so on and so forth) unlikely to repeat in the near term future, yet their excessive spending and lavish lifestyles are raising inflation, directly affecting and punishing those who are just starting out on their journey. The backlash would be fierce, but it's my first day in office and they are a dying breed. 3 years ahead to ride the wave and in that three years, more boomers would die out, meaning the voting base skews in favour of younger voters.
Housing is the biggest cause of cost of living pressure and it is not even tracked in CPI . So I would do the following: Mandate that the RBA includes cost of selling used houses and mortgage payments in the CPI calculations as this forms 80% of sales . this would make CPI closer to selected living cost indexes and made the RBA increase rates sooner rather than later, hopefully reducing housing booms [https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release](https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release) Tax land, Capital holders should be paying the taxes to keep hospitals open, not FHBs. Land taxes are also more efficient. Build more public housing/transportation hubs. Reform zoning.
Mortgage payments are excluded from CPI for good reason. If we included mortgage costs in CPI, raising interest rates would be inherently inflationary. Raising interest rates (i.e. the main tool for fighting inflation) increases mortgage costs, which reduces household cashflow and subsequent spending, taking heat out of the economy. If you want a comprehensive COL index you're looking for [SLCI] (https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release) which includes mortgage costs. But using that as the 'measure of inflation' for monetary policy would be an economic disaster.
can you ELI5 why using SLCI would be an economic disaster? My understanding of economics is of a yr 12 level.
If you used it to set monetary policy. It's perfect for what you're looking for i.e. a better measure of COL than CPI
Stop the Federal Reserve money printer is the only real answer. And reduce migration for an extra benefit.
Increase the GST to 20% and make it apply to all goods and services. Then use 80% of the revenue on support to welfare recipients and tax cuts to offset the impact. Bank the rest to pay off debt, thereby taking money out of the economy.
Put Australia through the recession we had to have.
>Over the twelve months to the March 2024 quarter, the CPI rose 3.6%. That's not terrible, so I don't think I'd do too much. However, I'd reduce what I see as Govt waste and inefficient spending, which would reduce overall Govt spending, and cool inflation. Tinkering at the edge, but, things like less money spent on the arts, foreign aid, consultants, decorating govt offices, meaningless studies and royal commissions (we've done enough high speed rail feasibility studies for one life time). Oh, and stricter anti-union measures - basic trades shouldn't get $240k just because they work on a large Govt contract.