What can the current or future governments do to reduce the cost of living pressure being felt by the majority of Australians?
Reducing cost-of-living pressures requires a combination of short-term relief measures and long-term structural reforms. Governments must balance immediate support for households with policies that address underlying economic issues, such as housing shortages, wage stagnation, and inflation. Tailoring policies to the specific needs of different income groups and regions is also crucial for effective implementation.
Below are some strategies the government (and/or state governments) can implement:
Housing Policy Reforms
Increase Housing Supply: Implement policies that encourage or directly fund the building of more affordable housing. This could include zoning changes, tax incentives for developers who build affordable units, or direct government investment in affordable public housing for low-income households.
Increase Housing Supply: Streamline planning approvals and incentivise the construction of affordable housing to reduce housing costs.
Regulate Housing Market: Implement measures such as rent control or stabilisation in areas where the market is out of control, though this must be balanced to not discourage new construction.
Rental Assistance: Expand the scheme to include low-income earners.
Taxation and Wage Policies
Tax Relief: Temporarily or permanently reduce taxes on essential goods, and adjust income tax brackets to benefit lower and middle-income earners.
Income Tax: Increase tax-free thresholds to boost disposable income.
Targeted Rebates: Provide rebates or credits for low- and middle-income households.
Reduce Consumption Taxes: Temporarily reduce or eliminate sales taxes (e.g. GST) on essential goods such as food, medicine, and utilities.
Minimum Wage Adjustments: Increase minimum wages in line with or slightly above inflation to ensure workers can keep up with living costs.
Support Job Creation: Invest in job training programs and industries with growth potential to reduce unemployment and underemployment.
Strengthen Labour Rights: Ensure fair wages and working conditions to improve household incomes.
Energy and Utilities
Subsidies for Energy: Provide subsidies or rebates on utilities for low-income households to reduce the burden of energy costs. This was implemented by the Albanese Government for 2024-2025 ($300 for pensioners and those on income support), and it should be an annual subsidy.
Promote and Invest in Renewable Energy: Invest in renewable energy projects to lower long-term energy costs for consumers.
Regulate Energy Prices: Good to see this is being done.
Healthcare
Universal Healthcare: Expand access to affordable or free healthcare – including dental and optical – to reduce out-of-pocket expenses.
Cap ALL Prescription Drug Prices: Regulate the cost of essential medications.
Transportation
Affordable Public Transport: Subsidise public transport fares or offer free travel for certain groups, enhancing accessibility and reducing the need for personal vehicle ownership.
Fuel Subsidies: Provide temporary relief on fuel taxes or offer subsidies to lower transportation costs.
Food Security
Support Local Agriculture: Implement policies that support local farmers which might lead to lower food prices and more stable supply chains. Invest in local food production to reduce reliance on imports and stabilize food prices.
Subsidise Essential Items: Provide subsidies for staple foods and implement temporary price caps on essential goods during periods of inflation.
Inflation Management
Monetary Policy: Work with central banks to manage inflation through interest rates, ensuring that price stability doesn’t lead to unnecessary cost increases for consumers.
Price Controls on Essentials: In extreme cases, consider temporary price controls on essential goods to combat rapid inflation.
Price Stability Measures: Monitor and address price gouging or anti-competitive practices in key industries.
Welfare and Social Support
Targeted Support: Provide additional support to vulnerable groups, such as low-income families, seniors, and single parents.
Strengthen Social Safety Nets: Ensure that unemployment benefits, disability support, and other welfare programs are robust enough to support people during tough economic times. In a nutshell: Raise the rate! Or better still…
Universal Basic Income or Similar Schemes: Explore or implement trials for UBI or conditional cash transfers to buffer against economic shocks.
Regulation of Market Practices
Consumer rights: Monitor and regulate corporate pricing practices to prevent price gouging, especially during crises and protect consumers from unfair pricing practices.
Long-Term Structural Reforms
Diversify the Economy: Reduce reliance on volatile industries and promote sectors with stable employment and wages.
Improve Productivity: Invest in infrastructure, technology, and education to boost economic efficiency and growth.
Regulate Speculative Practices: Address speculative activities in housing and financial markets that drive up costs.
Education and Job Training
Subsidise Education: Provide free or low-cost education and childcare (note: I understand something is in the pipeline) to ease financial burdens on families.
Skill Development Programs: Invest in education and vocational training to increase employability and wages, thereby indirectly reducing cost pressures by increasing income.
But…
Each of these measures comes with trade-offs, such as potential fiscal deficits, market distortions, or administrative burdens. Therefore, governments must carefully design, implement, and monitor these policies to ensure they genuinely reduce the cost of living without unintended negative consequences. Collaboration across different levels of government and with private and non-profit sectors can also enhance the effectiveness of these initiatives.
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Easiest & best solution.is to use union super money to provide fully insured primary home only loans to union members who pay membership dues and include full disaster insurance on those loans.
Full plan has been presented to political parties and ministers of both sides but ignored.
We live in a country where administration has no lived experience.
The living example of this approach lis the development of Canberra City.
I w
Ss there.
Me too, Gary. I appreciate your frustration.
some of these things they’ve done – energy relief has been helpful. But the simplest tax relief could be done right away. Split incomes for parents where one partner is a stay home partner – so each parent would pay only the tax on their half, effectively increasing the disposable income for that family. This and shifting the tax free threshold to $30,000 would make a MASSIVE difference to the lowest earners who spend all their income on products and services which benefits businesses, big and small.
SIMPLE
Social science 101, what is the definition of a ‘cost of living crisis’ relative to where or what (or ‘needs’?), how do you assess and which cohorts does it effect?
Younger demographics, middle aged unemployed, single pensioners renting, low income and young couples starting a family &/or first home with employment issues, definitely and unsurprisingly?
However, when it is applied to or used by middle or higher income about school fees, taxes, air fares etc., that’s just subjective whingeing and moaning, encouraged by the RW MSM and LNP, while showing both ignorance and a lack of empathy for those on lower incomes.
On the latter, can lead to the ‘libertarian trap’, hinted at in media daily by claims that ALP government spending is crowding out private investment (really?) eg. any investment in social/public housing (& potential fall in house values) is avoided?
Then on government spending, according to media, that needs to be curtailed, budgets balanced or decreased, then we can have another tax cut……
Several years ago friends had a rude shock, complaining about Oz electricity prices & cost of living (or regurgitating Oz talking points) while travelling in Europe; they were embarrassed to be told how many in one place were in a worse situation and maybe Australians need to be less ignorant and show more empathy for others….
Thanks Andrew for a welcome dose of common sense.
As you mention, there are those who are doing it tough, (as are no doubt some mortgage holders), but otherwise most are comfortable and can well afford their ‘little luxuries’.
I assumed a while ago that the “crisis” was manufactured as a convenient stick to belt the Government and the MSM are content to run with it for as long as convenient.
As you note Andrew, empathy is in short supply and will be further lacking on the hustings.
I find it interesting that the current Labor government, federally and the state Labor government here in WA have done a lot to address the ‘cost of living crisis’.
In a largely capitalist, free market economy there are some things that governments cannot control, cannot fix. Like soaring rents in a tight rental market where supply and demand sets the price. Yes, there is government social housing available, but that is limited.
Yes, governments, both state and federal have ‘co-purchased’ houses making homes affordable for many who otherwise would remain stuck in the rental market, then there are matters such as rebates on power bills, grants to families with school aged children to ease the burden of buying uniforms, stationary and so forth, provision of affordable public transport, pensions, health care and the list goes on.
Repeatedly, interest rates are mentioned in the mix, interest rates set by an independent body, the RBA. The government has worked hard to address the cause, inflation, which was inherited at around 7%, now between 2 and 3% through responsible management of the national accounts.
One thing that does not bear scrutiny, or didn’t under conservative governments is the way the supermarket duopoly, the hardware monopoly and other large business organisations are able to write record profits off the backs of the consumers whom the government is doing lots to help out, but who the businesses see as targets for increased profitability.
Oh, before I forget, the creation of new jobs, improved wages, and taxation relief.
So if there is a ‘cost of living crisis’, where is it coming from?