Wages inflation is not driving interest rates up.The price of fuel food,rent and housing are out stripping wages.This coupled with toll roads,State taxes/charges has really hurt the average punter.The RBA reacts by increasing interest rates and John Howard is suffering the consequences.

Rightfully the battler feels worse off even though the share market booms and the Govt boasts record surpluses.Over the last 10 yrs food inflation in Aust is 50% higher than countries like Canada or Germany.The same trend is happening with fuel.The reasons for this is that we do not have regulation to stop preditory pricing by the likes of Woolies or Coles.Competition policy is not premoting competition and the Coalition is denial about the regulation needed to stop these anti-competitive practises.

Decades ago we were promised a new nervana with the lowering of tarrifs so each country would specialise and produce cheaper products.Eventually their living standards would meet ours.It hasn't and won't happen since countries like China and India will have cheap labor for decades to come and with diminishing resources and energy supplies all living standards must fall.

So why are we playing this game called Globalisation with no level playing fields,with a downward pressure on real living standards so we can compete with 80c an hour.There needs to be a re-evaluation of our tarrif policies in the light of Global energy/environment constraints since our present polices deny the reality.

You're quite right Arjay. Globalisation has become a nightmare for the battler, but that was only to be expected. Globalisation was set up by huge and greedy corporations to increase their wealth at the expense of the ordinary worker, but mind you, some of those 'ordinary' workers/tax payers are equally to blame. The Western World has become a playground for the "mum & dad" investors who continue to pour funds into the share and property markets. Many of these people have gone out on the limb of debt to do so and it won't take a lot to bring their dreams crashing down.

Most educated people are beginning to realise that this situation can't last forever. The housing market is starting to wobble, as is the US financial markets. Yes, they've recovered for the time being, but only because of massive injections of Government printed cash, particularly from France and the US, but there's no guarantee that they will continue to regain their lost revenue. Add to that the looming prospect of the end of cheap fossil fuels and a market crash will occur that will easily eclipse the Great Depression, but this time the World won't be able to dig it's way out of the hole it's created through the overuse of cheap energy.
The rich moguls now seem to believe that they'll be impervious to the horrors of a World without cheap and abundant energy, but they'll be just like the rest of the commoners when the starving repressed masses begin tearing down the walls of their castles, so don't worry Arjay, the battler will obtain some sort of triumph during the depletion wars. Every dog has it's day.

Aime
We need a Government to step in and over ride the councils who allow the developers to buy up huge area on land in each suberb andknock out the private buyers.
There is plenty of cheap cheap land still out there in Australia for battlers.
Problem is the councils are doing their sweet heart deals with developers.
Its a total sham.
It MUST be stopped.
The Government MUST made land available DIRECT to the public just like they used to years ago.

The way many families got a start was anybody could attend a public auction of land and houses being sold through the Government
All you had to do was turn up on the day of auction which ten percent and bid.

If a girl was sixteen and eighteen for a boy. You did not have to show you were working as the land was cheap. You had to at least put up a fence within six years. Nearly everybody built a home and lived there. All my counsins started out that way buying government land. Now The Government and councils do it through delelopers. Its Wrong and unfair.

They buy whole town up and sit on them. They have even got most of the farms for subs. Just last night I missed three blocks at twenty two thousand I wanted for a battler.

I missed them by four days. The developer who got them now wants two hundred and seventy five thousand.

They even had very low Government finance. As for food we need gardening taught in schools like maths.

Wipe out this Council bi- law people cant have a couple of chooks for fresh eggs and teach the kids where they come from.

Not to mention the cruel intensive cages where they keep them and pump them with anti biotics and force us to eat and feed our kids with.

This is still a good country but councils have TOO much power.

I often wonder Arjay why people seem to ignore State Governments Taxation and Levy’s as also the precursor to ridicules levels of Inflation; For if some have not noticed the massive increases in Electricity charges- Levies on Insurance policies as well as the other 700 odd increases of State Tax and charges levied From July 2007 etc; but that aside, then we have the N S W housing crisis, - Where State Government-( Include Local Government) charges on new developments is near 90% of the actual cost of construction and development, and in turn has artificially inflated the Housing market in N S W- I wonder what calculations have been made to include this into inflationary figures of late; and where the Tax money that was to fund these Initiatives- why has it been depleted? -
Throw in the odd Toll Way and Tunnel in there also, and someone should have to ask the hard question of; Our Taxes are only funding the Leviathan of Bureaucrats and Consultants who produce nothing but misery and Debt, and we have to surrender our actual Private Property rights to fund the Leviathan of Bureaucrats and their own depraved existence.
That’s what I would define as Inflation Pressure.
Welcome to the new world order of Disorder and new age thievery.

Yes All,it is a fact that has escaped both sides of Politics.The Coalition has really dropped the ball particularily with IR reform.Belatedly Joe Hockey admits he got it wrong.Well it was huge mistake.

I really worry about where Labor will take us.Neither of the parties have attempted to address the above mentioned problems.Labor has it's foundations in a union movement that has 85% of its power base in the Public service.We have seen the growth of bureaucracy and taxes that have crippled NSW,what will Labor do nationally when the PS Unions call in all their favours?Taxes go through the roof to pay for their excesses?Govt waste and the debacles of the Whitlam era?Neither of the major parties truely represent the majority.The Coalition has a definite bias towards big business and Labor the PS Unions.

Time for a new mainstream Party.

Arjay, a couple of years ago it was pointed out by the NFF (from memory), that Australia had some of the cheapest food in the world. Canada was quoted as an example of how much more expensive food could be. It therefore doesnt surprise me to see that our food expenses have increased at a higher rate, as they will only be starting to catchup with other developed nations. Our drought has also put a major squeeze on food prices, and with the southern season again looking dismal, expect further price squeezes as supply tightens further.

The housing crisis is real, but the individuals being hurt are as much to blame as any land developer. People are just not prepared to start small anymore. First buy a small house. Live with it for several years. Your wage will increase over time and you'll find out that you'll be able to pay the thing off much faster than when you first bought. That coupled with natural rises in prices will see you be able to upgrade once the kids at in highschool (and need a bit more space to run amok). Too many people want everything now, and feel that they deserve to reward themselves simply for living (ie working hard to provide for themselves).

A lot of bad, poorly thought out ideas is this topic,

So to curb inflation we should raise tariffs, ripping off consumers by forcing them to pay more (raising prices) for inefficiently produced goods that they could buy cheaper elsewhere?

Everyone in Australia benefits from free trade because we can buy the most efficiently produced goods on the world market without price distortion. Prices without tariffs will always be cheaper than prices with tariffs. Tariffs are a inequitable tax on consumption that distorts competition both directly and indirectly makes everything we buy more expensive than it should be.

The global economy is working on a scale larger than it ever has. Hundreds of millions of Chinese and Indians have been lifted out of poverty and are earning higher real wages through export oriented enterprise, just like millions of Japanese and Koreans before them who now enjoy first-world living standards from the poverty of World War.

Wage rises not linked to productivity gains will cause inflation as the nominal value of money paid to produce goods no longer represents the same value of goods produced as it previously did. Inflation corrects the distortion caused by wage rises unlinked to productivity gains by restoring nominal prices to their real value. The RBA uses inflation targeted monetary policy to increase the cost, and hence decrease the excessive supply of money that has expanded quicker than real economic growth, lowering excessive inflation by increasing interest rates.

The increase in world demand for resources, and hence their increase in scarcity and value has been far more beneficial to Australia than costly. Haven't you heard of the mining boom? Australia is making huge returns on our natural resources and at the same time investing in the expansion of global productive capacity that will result in cheaper goods for all consumers and higher global living standards.

All working Australians get a superannuation top up on their wages that is being invested into the world economy. Every workers superannuation fund is enjoying the returns of the global economy and getting wealthier off it. The "greedy corporations" are only greedy because there trying to get the best return for your super fund. Australian institutional investors dominate equity markets, not a domestic elite.

Not all workers win in the short term as they face global competition, unskilled labour in Australia can't compete with unskilled Chinese or Indian labour because it offers nothing more at a higher cost. Education and upskilling into industries that are internationally competitive (trade specialization) is the answer, and one that Australia has succeeded in. Unemployment is the lowest rates in decades, and wages continue to grow in real terms, where's the better solution?

Property prices are high because demand has outstripped supply. Councils need to allow developers to build the maximum amount of housing in the minimum amount of space. Our capital cities need medium and high density development to increase the supply of housing to satisfy demand. I can't see how individual developers could corner the housing market, how can they exert enough market power to prevent development that increases supply? A more visionary approach would be to realize that Australia needs more cities, and to plan and encourage their development.

Predatory pricing is illegal, as is price fixing. Woolies and Coles have been prosecuted when they have conducted anti-competitive behaviour. Maybe the ACCC should go harder on them, but you don't combat one form of market distortion (collusion) and add to it another (tariffs), both just rip off consumers.

Tristan, you make some very good and well thought out points. My only criticism is that you appear to be firmly tied to the apron strings of the Global economy and the growth of cheaply manufactured goods that are little better than useless toys for those who can afford them, or those who falsely believe that there will be no day of reckoning in relation to their credit card debt.

Because of all the unnecessary crap that gullible people continue to buy, the debt of individuals continues to outweigh the wealth created by the mining boom and the Global economy.

I would also strongly dispute your sentiment concerning "greedy corporations" simply attempting to make our superannuation work better for us in our retirement. Corporations exist for the same reason as any other business.........to make more and more money, which in turn amounts to more money for investors and corporate executives. Almost every day we see newspaper reports concerning the obscene amount these corporate heads receive in renumeration, sometimes for a job very poorly done.

Something is very wrong when corporate heads are raking in a yearly salary that far eclipses that of our Prime Minister, useless as he is!

Tristan one point you have not addressed is that with a world with limited energy/resources;as the great masses of China and India use more so will prices rise dramatically.This means that our living standards will fall.Cheap energy underpins our living standards.There will be winners and losers with more globalisation but for already developed nations,we will have more losers.

My solution is to selectively impose tarrifs to keep industry here.Our balance of payments deficit is almost $120,000.per working family and growing even with record sales of our resources.We seem to be the sacrifical lambs in lowering tarrifs in areas no one else dares tread.There is no method in our madness since we have bared our bellies for no gain.China would not dare do what we have embarked upon.It has all been too premature.

Curses Arjay, CURSES! You sprung my "Tristan trap" prematurely. I was awaiting Tristan's reply before asking the question..... What about the end of cheap energy?

Those proponents of Globalisation and an ever expanding economy appear to be blinded by greed to the fact that very soon their corporate World will come crashing down around their ears. The levels of debt in this country alone is staggering and the "quarry" mentality of our National leaders is equally staggering. Once they realise that cheap and abundant energy has gone forever, those with the "growth at all costs" mentality will see the folly of their belief in the false God of "money and perpetual growth."

Our leaders should be fighting tooth and nail to keep manufacturing viable in this country, although I believe it's too late to introduce penalties for companies who go "off shore." Most of the companies left in Australia are foreign owned anyway, so they can simply thumb their noses at our Government and close the door on their way out!

Of course, none of this helps the battler who struggles against the price rise of everything from groceries and fuel, to the price of housing and education. It's the battler who bears the brunt of this madness called Globalisation. And yet, I feel that even they will have their day in the sun. Battlers are practical people and it's they who will survive once energy is no longer freely available.

Aime,there is another very important reason to keep manufacturing here.When Aussies invent new products/concepts there is no concrete or intellectual infrastructure to develop the product here.Industries and our Universities used to work in unision.We now just educate foreigners so we can be their future serfs.

We have really lost the plot,because most of our innovations just go overseas.The concept of a totally Globalised Planet whereby everything has a price and is up for grabs repulses me.Why bother having borders or an Aussie flag?

Tristan You overlook (like everybody else) the real reason for the real estate price increases. This is a flood of credit as banks take on what economists call "good private debt" to cover the enormous Current Account Deficit (CAD) now standing at more than a billion dollars a week. They need us to take on the interest burden by bidding up the prices with mortgage loans. They'll give you enough to bid the price up even if you can't prove that you have an income ("no doc here" and "sub prime" in the USA).

The problem now is that we don't have much more free cash to pay much more interest. But our demand for imports and the continual closing of factories because of free "trade" means that the banks are going to be stuck with more and more of this marvelous "private" debt to cover the CAD which is running at 16 billion dollars a quarter. They are putting up fees in a desperate attempt to cover it. But the interest rates must go up.

The tipping point is close real estate prices in the USA are dropping.

If the governments (liberal and labor) had been considering the battlers they would not now need to be (privately) concerned about the big end of town. Poverty looks like filtering up as it did in the 1930s.

"Ah mammons slaves your Knees will knock.
Your hearts in terror beat
When god demand an answer for the faces in the street"

from "Faces in the Street" by Henry Lawson

Tristan’s version is contributed by the New Labour Left Proletariat abyss of Creative acounting -; you see, in many ways demand is the determining factor in some instances, and more so when a new product is released on the market to recoup costs of Research and Development; and now you must realise that only exists in a certain category of consumer goods.
But to rephrase a terminology, it is not actually the economic cost of production on sale, instead it has become an Auction in its literal interpretation and on sold to the highest bidder , and with housing and Property, the rediculess over inflated costs imposed by government Looting is included.Note; Labour Party prolateriat economics at work here.

That is working off a Leviathanic assumption that you have money to purchase it , or you are able to service the loan to finance it; Yet again Value for Value has been distorted and costs dramatically inflated.

Bright spark is correct in his/her assumption that we are witnessing again the catalyst that set off the 1930’s depression- and again we are left to ask the same questions- Where the hell did the money go;;; and a short answer is exactly the same place our farmers have been forced to go, into an abyss.

Be certain , Enron was just a drop in the ocean, Value for value no longer exists in mainstream business ; just a who lot of empire building and looting and Governments Leviathanic existence is the over weight cretin to tip the scales… and is doing so.