Labor’s ‘cost-of-living relief’ is a joke

The federal Labor government has overseen the biggest fall in living standards in at least half a century. And Australian household income has dropped by more than in any comparable country in the last two years, according to a recent report published by the Organisation for Economic Co-operation and Development. Young people in particular have been screwed by rising rents and falling wages.

People are rightly pissed. According to polling in mid-October, Anthony Albanese’s net approval rating has fallen to a new low of negative 14 percent, and the ALP’s primary vote has sunk to 31 percent.

Yet, if you took the Labor PR machine seriously, you’d think the government was doing all it could to help people economically. There is endless talk about “cost-of-living relief” and bragging about the measures Labor has implemented. But what has the government really done?

The prime minister’s website has a special “cost of living relief” page that highlights every policy Albanese is trying to promote. At first glance, the listed measures appear to be designed to put more money into the pockets of struggling people. But dig a little deeper and you’ll find a different story. Many big-ticket relief items are just handouts to big business—a transfer of tax dollars to mega-corporations already raking in super-profits from charging higher prices.

Take the energy rebate, which reduces annual household energy bills by $300. While it has helped millions struggling with eye-watering bills, it is also a $3.5 billion gift from taxpayers to the energy companies that have been ripping us off in the first place. And it’s hardly one they need. AGL, Australia’s largest electricity generator, recorded a 189 percent increase in underlying profit to $812 million in the last financial year. Origin Energy’s profit surged 172 percent to $1.2 billion, on top of an 83.5 percent increase the previous year. They are raking it in.

The government could have capped energy prices, or imposed a super-profits tax on the energy behemoths, and saved the tax money for something else, like housing. But it is too wedded to the idea that companies have an ordained right to extract as much profit as possible through the market, regardless of the social consequences.

It took the same approach to child care. Last year, the Child Care Subsidy was lifted and broadened to include more households. Once again, the government is just handing stacks of money—$10.7 billion, to be precise—to, in many cases, private for-profit childcare centres.

A report released at the end of last year by the Australian Competition and Consumer Commission found that any financial benefits from increases to the government subsidy were largely, if not wholly, eroded by increased day-care fees. It also found that “childcare fees across all services have grown faster than inflation and wages since the introduction of the subsidy”.

Like the energy companies, childcare companies are rolling in cash. G8 Education, Australia’s biggest listed childcare company, posted a 53 percent profit increase in 2023 and paid its CEO a $3 million package. That same year, G8 increased its fees by nearly 25 percent.

So the government’s great plan means that parents are out of pocket just the same, the Treasury is poorer, while the companies increase their margins. Great “relief” if you can get it.

Then there’s the housing crisis, which needs no introduction. Labor promises to fix it by building 1.2 million homes by the end of the decade through the $32 billion Homes for Australia plan. It’s already failing: forecasts from Oxford Economics in July showed that the government will miss its target by more than 20 percent.

More to the point, Labor’s entire plan follows the same investor- and developer-first model that created the housing crisis in the first place.

This is most notable with the Housing Australia Future Fund (HAFF)—Labor’s answer to affordable housing. It’s another handout to private developers, construction firms and investors. The HAFF fact sheet repeatedly states that “one of the key objectives of the program is to encourage private investment in social and affordable housing”. The model is designed to get private investors to team up with a social housing provider to purchase, renovate or build new housing stock by handing over government money to ensure each project remains profitable.

Take it from Conscious Investment Management chief investment officer Matthew Tominc, who has established a $200 million fund to cash in on the plan. He told the Financial Review that the HAFF would likely offer investors a net 8 to 12 percent return, guaranteeing no losses. So the big winner will again be—you guessed it, the investor class.

As for anyone not in the social housing sphere, which is most people, the government is basically hoping and praying that spending money on infrastructure will encourage developers to build more homes. But it’s doing nothing to ensure those homes will be affordable—the generous tax concessions and other incentives for investors remain untouched.

Another category of cost-of-living relief is the Stage 3 Tax Cuts, which could also be called “tax cuts that will help ordinary people a bit, but disproportionately benefit the rich and further entrench economic inequality”. Accurate, if a bit wordy.

Finally, there are measures that aren’t objectionable but are so small that it’s almost like the government is playing a joke on the rest of us.

For instance, the government claims it’s “delivering a better deal for renters” by raising Rent Assistance. The payment is available only to eligible welfare recipients—a fraction of the renting population. It’s also minuscule—it was raised by 10 percent to a maximum rate of $211 a fortnight for a single person with no children (the current median fortnightly rent is about $1,250).

Eligibility for the single-parent payment has been extended to when the youngest child turns 14, up from 8, but still below 16—where it was when the Gillard Labor government reduced it in 2013. It’s also a maximum of $987.70 per fortnight. How anyone is supposed to live on that is one of society’s great mysteries. And despite a recommendation from the government’s own Economic Inclusion Advisory Committee, the below-the-poverty-line JobSeeker payment has hardly been touched.

Wage rises also slide into the “did you even notice?” category. The government congratulates itself for backing a 3.75 percent pay rise for minimum- and award-wage workers and a 15 percent pay rise for aged care workers. It’s good that the workers got a pay rise, but it’s hardly enough.

Even with two significant wage increases, aged care workers will still receive only $25 to $30 an hour, depending on their role. We’re talking about small bumps to extremely low wages. As of July, average real wages for all workers were still nearly 5 percent lower than before the pandemic.

To top off this list of do-little policies, Labor’s latest offering is banning debit card transaction fees, which banks charge when you buy something with a debit card. Obviously, the move is supportable. But touting it as a game-changing measure is absurd.

It’s like the Albanese government is parodying itself. In the last financial year, Australian banks made $40 billion in profit, an 8 percent increase on the previous year. Prolonged high interest rates have been a windfall for the so-called Big Four—the Commonwealth Bank, ANZ, NAB and Westpac—which charge a higher interest rate on loans than they pay into savings accounts.

Debit fees range from 0.5 to 1 percent of the cost of a transaction. Sure, we should all hang on to that money, but will it make the slightest difference to the crushing weight of rising rents, mortgages, bills, groceries and everything else? No.

Labor is taking us for a ride. They know there’s a crippling cost-of-living crisis and they don’t want to take on big business, but they also want to win the next election. So they’re giving handouts to big business, throwing pennies at the rest of us and calling it relief.