Thursday, February 21, 2008

The Consumer Revolution Continues 3 - food prices

We are renting in Sydney. This week we received notice that our rent had increased to $530 per week, $27,560 per annum. I understand the landord's position. But crikey it's hard.

To accomodate this rent rise I need an increase in post-tax income of $1,560 per annum. That may not sound like a lot, but coming on top of other price increases it's a fair bit. Certainly, my post tax income has not increased by enough to accommodate price increases.

So do I dice what I am doing at the moment and start chasing more money? I happen to think that I am making a contribution, but I am not sure how long I can afford to do so.

Now I would be the first to accept that we are better of than most Australians. We have three household incomes at present. But how, I wonder to myself, do others survive? The answer is with a great deal of difficulty.

Take, as an example, three young people on Newstart- the modern equivalent of unemployment benefits - sharing a house. Their collective income is is $741 a week. That's not a lot spread over three.

This morning I had cause to look at a portfolio of social housing properties. Just one household out of 160 had an income higher than this family's weekly rent.

Back in July I ran a post on Australian food prices. This post continues to attract more traffic than any other post on this blog. It does so because people are worried.

We live in strange times. The affluence of modern Australia would beggar the belief of past generations. Yet they would be appalled at the maldistribution of wealth.

This post is in danger of becoming a tad too serious. Further, it is off the point that I had intended to follow. I find, however, that I get very angry at some of the comfortable assumptions of middle class Australia.

I will let the matter rest here.

Friday Postscript

Because the National Housing Conference is on in Sydney, the local media has been full of stories about the housing crisis. I have very mixed feelings about some elements of the arguments put forward.

Take a wealthy area where people want to live, so they move in and drive prices up. Then this squeezes out support workers on lower salaries - teachers, firemen, police etc.

Now in a market economy, the locals should pay more for services. In theory, this should allow for higher salaries to the support workers so that they can afford to live there too.

In practice, this does not and indeed cannot happen. In a few cases subsidised housing is provided. More often, people commute on subsidised transport systems. In both cases, the whole community ends up subsidising the life styles and locational decisions of the better off.

I recognise that I have put this in simplistic terms. But it is an issue.

I was going to add some numbers to this, but I have decided to run them as a separate post.


David said...

Caro Jim - Welcome to the long term effects of Reaganomics (also known as supply side economics).

Jim Belshaw said...

There is indeed some truth in what you say, David.

Anonymous said...

Time to get those daughters of yours chipping in, Jim...

Jim Belshaw said...

Eldest does help, M, although she is now working her way through Uni. Youngest has yet to establish anything approaching a stable income!