AUSTRALIA’S TRUE COST-OF-LIVING

THE AGE of 1 February 2025 carried an article by Millie Muroi suggesting “The CPI isn’t an accurate measure of our cost of living”.

The claim is quite true.

Whereas a rental equivalent for housing and the cost of building new homes is included in the CPI, an allowance for the escalation of residential land prices is not. Table 61 to the National Accounts shows that Australia’s residential land values increased from $410.5 billion to $7711.6 billion between 1989 and 2024, an extraordinary average increase of 11.0% pa.

Therefore, as ‘real’ wages are determined by dividing nominal wages by a cost-of-living index, an allowance for land prices is essential if the index is to be anything like realistic.

So, who is served by denying the true rate of inflation?

It looks suspiciously like Australia’s politicians, banking and the real estate industry are on a mission to keep the measure of inflation lower than it really is. 

We ignore to our peril the case for an all-in land tax to keep a lid on Australia’s escalating land prices, as proposed by the Henry Tax Review.

BOOM AND BUST

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The history of boom and bust is the history of miscreant private banks competing with each other to pump excessive credit into land prices. The financial implosion at the end of each eighteen year cycle proves it to have resulted from impossible levels of credit having generated gigantic real estate bubbles.

With all the public finger-pointing and doctored reasoning for the financial collapse out of the way following the bursting of each bubble, this taxation-directed process, engineered for rent seekers only, is permitted to resume for the next eighteen year cycle.

No better account of the lengthy list of those concerned with Victoria and Australia’s 1890s depression is to be found than in Michael Cannon’s “The Land Boomers“. We learn that the biggest rogues were located in parliament, the banks and real estate agencies. Most of these settled their extremely speculative debts for pennies in the pound, in secret legal ‘compositions’.

With the media emphasizing the collapse only in terms of the worst personalities involved, a public taxed on its incomes and purchases is thereby directed from laying any blame on the tax regime and high-level political, banking and real estate interests in aiding and abetting the speculative bubble. The cycle must be allowed to repeat. It is, after all, ‘The natural business cycle’.

Thusly, we head into the final two years of the current land price bubble, lurching towards a financial collapse such as the world has not seen.

While the repetitive process is many times worse than sad, both ‘legacy media’ and nouveau Trumpians enjoin we plebs to acknowledge our lowly position. We need to respect the wishes of our political leaders: they will fix things.

I won’t be holding my breath.

2027: THE DEPRESSION WE HAD TO HAVE