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Meanwhile,housing construction is at decade lows. That leaves it way below the government’s target,meaning it won’t make any sort of a dent in rents or house prices. In fact,pretty much anywhere you look there’s evidence that the big squeeze on family finances is starting to draw more blood. That’s pretty bad news.
Confusingly,it’s also good news. Here’s why.
Your cost of living soared as inflation surged well ahead of wages because inflation pushed you into a higher tax bracket,and because the Reserve Bank of Australia has been fighting inflation by raising interest rates. That says your cost-of-living challenges are the symptoms of the disease of inflation. So you really,really want Australia to keep winning the war against inflation.
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And here’s the thing. At its simplest,we have an inflation problem because there are too many dollars chasing too little stuff. That’s why the RBA has been raising rates – it’s deliberately taking money out of the economy to chop inflation down further.
Yet to keep winning the war against inflation means keeping a close eye on the “too many dollars chasing too little stuff” equation.
Sadly,though,Australian governments are taking a gamble. While the Reserve is taking money out of the economy,governments have thrown the switch to vaudeville. Each of the federal,Queensland,Victorian and West Australian governments just unveiled big giveaways. (Queensland has an election coming,so itsannouncements were the most spectacular,stopping barely short of throwing in a set of steak knives.)