tag:theconversation.com,2011:/uk/topics/abs-1778/articlesABS – The Conversation2024-03-06T05:47:56Ztag:theconversation.com,2011:article/2243572024-03-06T05:47:56Z2024-03-06T05:47:56ZChalmers changes tack as economic growth sinks to a new post-pandemic low<p>Wednesday’s national accounts show economic activity barely grew during the three months to December, climbing just <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">0.2%</a>. That’s the lowest growth rate in four quarters, each of which was lower than the one before it.</p>
<p>Australia’s annual rate of economic growth – 1.5% – is the lowest in 23 years, excluding the COVID-induced 2020 recession.</p>
<p>In response, Treasurer Jim Chalmers said the balance of economic risks had changed. </p>
<p>While it was not “mission accomplished” on inflation, Chalmers’ May budget would mark a shift from what had been “almost a sole focus on inflation, a successful focus” to the “trickier terrain” of supporting growth.</p>
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<p>Strong population growth meant economic activity per person shrank for the third consecutive quarter, in what some commentators are calling a continuing <a href="https://www.abc.net.au/news/2024-03-05/why-australias-economy-is-heading-into-reverse-gdp-budget/103543036">per capita recession</a>. </p>
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<p>Household spending was anaemic, climbing an inflation-adjusted <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">0.1%</a> over the quarter and only 0.1% over the year after earlier falls.</p>
<p>Adjusted for population growth, spending per person shrank sharply.</p>
<p>The Bureau of Statistics reported a big fall in discretionary spending (down 0.9% over the quarter) offset by an increase in essential spending (up 0.7%).</p>
<h2>Cooking at home</h2>
<p>Spending on food and on electricity drove the rise in essential spending. The fall in discretionary spending was driven by a slide of 2.8% in spending on hotels, cafes and restaurants. This fall suggests, in the bureau’s words, that Australians “substituted cooking at home for eating out”.</p>
<p>Imports slid 3.4% in the quarter as wholesalers satisfied demand by running down <a href="https://www.abs.gov.au/statistics/economy/business-indicators/business-indicators-australia/dec-2023">inventories</a> rather than importing as many goods.</p>
<p>A briefing to investors by Myer chief executive John King in February suggests this has been a <a href="https://investor.myer.com.au/Investor-Centre/?page=ASX-Announcements">deliberate strategy</a>. King spoke about “controlling intake to match trading conditions”.</p>
<h2>Saving a bit more</h2>
<p>Australians saved a bit more in the three months to December after reducing saving during the three months to September in order to pay bigger-than-usual tax bills following the axing of the temporary <a href="https://theconversation.com/why-do-i-suddenly-owe-tax-this-year-it-could-be-because-the-low-and-middle-income-tax-offset-is-gone-forever-214632">low-and-middle-income tax offset</a>.</p>
<p>While some of the saving might be cautionary (concern that worse times might come), the good news is that on average consumers are still saving rather than running down their savings. </p>
<p>The stage three tax cuts due in July will shore up pay packets, further helping to shore up savings.</p>
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<p>The weaker tax take in the quarter gave Australians a reprieve on real household <a href="https://theconversation.com/prepare-to-hear-about-an-official-recession-unofficially-weve-been-in-one-for-some-time-224963">disposable income per capita</a>, one of the best measures of the standard of living.</p>
<p>It grew 0.9%, after falling for most of the previous eight quarters.</p>
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<h2>Productivity bouncing back</h2>
<p>After sliding since early 2022, labour productivity has climbed for two quarters.</p>
<p>In part, this is a mathematical outcome of the definition of labour productivity, which is GDP per hour worked. In recent quarters hours worked have been falling.</p>
<p>Chalmers said while the productivity news was “<a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/national-accounts-december-quarter-2023">encouraging</a>”, reported quarterly movements could be volatile and it would take some time to reverse the decline.</p>
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<h2>Where to from here?</h2>
<p>The good news for the May budget is Australia’s terms of trade (the ratio of the prices received for exports to prices paid for imports) slipped only 3.9% during 2023. That compares to forecasts of much bigger falls for 2022-23 in the 2023 May budget and December update of 13.25% (budget) and 6.5% (update). </p>
<p>The better-than-expected terms of trade suggest mining companies will be in a position to pay more tax than had been expected.</p>
<p>This both increases the chances of a second (and even a third) consecutive budget surplus and gives the treasurer a bit more room to reorient the budget toward measures that support economic growth.</p>
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Read more:
<a href="https://theconversation.com/we-know-how-to-boost-productivity-and-lift-wages-but-it-will-take-time-and-much-tougher-tax-reform-207609">We know how to boost productivity and lift wages – but it will take time and much tougher tax reform</a>
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<p>Chalmers is probably hoping the Reserve Bank is thinking along the same lines.</p>
<p>The annual increase in gross domestic product of 1.5% for the year to
December is exactly the increase that the bank <a href="https://www.rba.gov.au/publications/smp/2024/feb/overview.html">forecast</a> in its most recent update.</p>
<p>This means it is likely to conclude the economy is slowing as expected and leave rates on hold for some time. Asked what he thought the Reserve Bank would do, Chalmers said he wouldn’t comment but pointed to financial market forecasts. </p>
<p>Trading on the <a href="https://www.asx.com.au/markets/trade-our-derivatives-market/futures-market/rba-rate-tracker">Australian Securities Exchange</a> points to an even-money chance of a rate cut by June and a 100% chance of a rate cut by November.</p><img src="https://counter.theconversation.com/content/224357/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins was formerly a senior economist with the Reserve Bank and the Australian Treasury,</span></em></p>The treasurer says the 2024 budget will be about supporting growth after the weakest economic figures in 23 years outside of a recession.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2249632024-03-05T09:48:44Z2024-03-05T09:48:44ZPrepare to hear about an ‘official recession’. Unofficially, we’ve been in one for some time<p>Australians are set to find out if we are on the edge of a so-called “official” recession.</p>
<p>Due out <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">mid-Wednesday</a>, the national accounts will either show spending, incomes and production continued to grow in the three months to December, or show they fell.</p>
<p>If they fell, it would be the first of the two strikes needed for what some people call an “official” recession. (Though surprisingly, there’s no such thing here in Australia, as I’ll explain later.)</p>
<p>The second strike would be a fall in the following three months, the so-called March quarter. If we get <a href="https://www.investopedia.com/terms/r/recession.asp#:%7E:text=The%20Bottom%20Line-,A%20recession%20is%20a%20significant%2C%20widespread%2C%20and%20prolonged%20downturn%20in,the%20economy%20is%20in%20recession.">two quarters in a row</a>, all manner of people – probably including the treasurer – will declare it a recession.</p>
<p>But whatever Wednesday’s data shows, the truth is we are already experiencing the biggest dive in living standards in half a century – and have been for two years.</p>
<h2>How to spot a genuine recession</h2>
<p>The figures due out on Wednesday will give us an indication of whether ordinary Australians are better or worse off, if we know where to look.</p>
<p>The first thing to do is to put to one side the headline increases or falls in gross domestic product (GDP). Those are spending, income and production over the entire economy each three months.</p>
<p>Those figures show GDP growth was weak before the pandemic, very weak during lockdowns (shrinking for two successive quarters), then strong as lockdowns ended. It’s been exceedingly weak since.</p>
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<p>But this tells us little about spending and income per person, which is how each of us experiences daily life.</p>
<p>Adjusted for our current very high rate of population growth, GDP per person is extremely weak. It’s been falling, or barely growing, for three quarters now.</p>
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<p>And even this doesn’t tell us enough. </p>
<p>What matters most for each one of us – in the view of Chris Richardson, formerly of Deloitte Access Economics – is <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">real household disposable income per capita</a>.</p>
<p>Unfortunately, the bureau of statistics doesn’t display this on its website. But it’s easy enough to calculate from the bureau’s spreadsheets.</p>
<p>It’s the income accruing to households, adjusted for the prices paid by households, and then adjusted some more.</p>
<p>The bureau also subtracts taxes paid (which have climbed because of the expiry of the <a href="https://theconversation.com/why-do-i-suddenly-owe-tax-this-year-it-could-be-because-the-low-and-middle-income-tax-offset-is-gone-forever-214632">temporary tax offset</a> in mid-2023). And it subtracts net interest payments, most of which are mortgage payments.</p>
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<p>In his public presentations, Richardson says he refers to real household disposable income per capita as “living standards”, because that’s what it measures.</p>
<p>It shows weak spending, rising prices, a greater tax take, and much greater payments on mortgages have been shrinking living standards for two years.</p>
<p>That’s how it has felt for two years, even if the way the pain has been spread has been different than in the past.</p>
<h2>The biggest dive in living standards in half a century</h2>
<p>Previous dips in household disposable income per capita have been accompanied by high unemployment, concentrating the pain in the unlucky group looking for work at the time. </p>
<p>In contrast, this dip in living standards has been accompanied (so far) by low unemployment, pushing more of the burden onto working taxpayers.</p>
<p>Looked at through a longer-term lens (the longest the bureau’s spreadsheets allow) the latest dive in real household disposable income per capita is the biggest in half a century.</p>
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<p>The broad picture is of fairly steady living standards until the mid-1990s, accelerating living standards during the 2000s mining boom, and then fairly flat (rising slowly) after the 2008-2009 global economic crisis. </p>
<p>They jumped for a bit during the COVID lockdowns, because of all the government assistance. But they’ve been diving since.</p>
<h2>There’s no such thing as an official recession</h2>
<p>Perhaps surprisingly, given how much we talk about “official” recessions, even the Reserve Bank of Australia says <a href="https://www.rba.gov.au/education/resources/explainers/recession.html">“there is no single definition of recession”</a> here.</p>
<p>Many people talk about a recession meaning two quarters in a row of shrinking spending and income. This appears to date back to a 1974 <a href="https://www.nytimes.com/1974/12/01/archives/the-changing-business-cycle-points-op-view.html">New York Times</a> article, written by a US business cycle expert Julius Shiskin. </p>
<p>He said two quarters of shrinking economic activity was <em>one</em> of the criteria you could use to decide whether or not an economy was in recession. </p>
<p>Shiskin’s pronouncement was subsequently latched on to by journalists all over the world, who made it <em>the</em> definition because it was simple.</p>
<p>But it has led to nonsensical conclusions.</p>
<h2>How Australia and the US differ</h2>
<p>Three decades ago, after the release of the <a href="https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/9B5F32621050BC95CA2575050019621A/$File/52060_1990_SEP.pdf">September 1990</a> national accounts on November 29, Treasurer Paul Keating declared they showed Australia in recession. </p>
<p>Keating famously added: </p>
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<p>the most important thing is this is the recession that Australia had to have.</p>
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<p>Those words live on, but the so-called “recession” didn’t. It vanished soon after. What had been a small decline in economic activity, followed by a big decline, got revised to become a small increase, followed by a big decline.</p>
<p>How? The Australian Bureau of Statistics revises the national accounts as a matter of course, each time new information comes in. </p>
<p>Its revisions moved Australia’s early 1990s recession to the March and June quarters of <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/sep-2023/5206001_Key_Aggregates.xlsx">1991</a>. </p>
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Read more:
<a href="https://theconversation.com/per-capita-recession-as-chalmers-says-gdp-steady-in-the-face-of-pressure-212642">Per capita recession as Chalmers says GDP 'steady in the face of pressure'</a>
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<p>A “recession” even <a href="https://www.smh.com.au/opinion/australias-national-accounts-recession-were-not-even-close-20161207-gt5zih.html">briefly</a> appeared after revisions to the 2000 national accounts, under Prime Minister John Howard and Treasurer Peter Costello. Then it disappeared, after further revisions.</p>
<p>In the United States, they’re not nearly as mechanical. There, there isn’t an official recession until a committee of elders convened by the National Bureau of Economic Research says so. Its <a href="https://www.nber.org/research/business-cycle-dating">proclamations</a> have broad support.</p>
<p>If Wednesday’s figures show Australia’s economic activity shrinking, we will hear a lot more about an “official” recession. But it will make little difference to Treasurer Jim Chalmers as he prepares this year’s May budget.</p>
<p>Just like the rest of us, he knows things are going backwards.</p><img src="https://counter.theconversation.com/content/224963/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin is Economics Editor of The Conversation.</span></em></p>The best measure of living standards – real household disposable income per capita – has been going backwards for two years. It’s the biggest dive in living standards in half a century.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2234532024-02-14T05:02:42Z2024-02-14T05:02:42ZIf the ABS guts Australia’s time use survey, women’s work will count for little<figure><img src="https://images.theconversation.com/files/575536/original/file-20240214-16-co4vkx.png?ixlib=rb-1.1.0&rect=277%2C206%2C1907%2C1019&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/01AC26F86E989B2FCA2573F5001528F1/$File/41500%20tus%202006%20diary.pdf">ABS</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Childcare is probably Australia’s <a href="https://www.pwc.com.au/australia-in-transition/publications/understanding-the-unpaid-economy-mar17.pdf">largest industry</a>, most of it unpaid.</p>
<p>We know this because of Australian Bureau of Statistics <a href="https://www.abs.gov.au/statistics/people/people-and-communities/how-australians-use-their-time/latest-release">time use surveys</a>. Since 1992 these surveys have recorded what thousands of Australians say they do with their time in <a href="https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/20B53461F3AA25F2CA25722500049576/$File/41530_1992.pdf">diaries kept for 48 hours</a>.</p>
<p>But if the Bureau of Statistics proceeds with its current plans for <a href="https://www.abs.gov.au/about/our-organisation/corporate-reporting/abs-corporate-plan/2023-24/forward-work-program">scaling down</a> the survey we soon won’t be able to tell.</p>
<p>Australia has not only <a href="https://link.springer.com/referenceworkentry/10.1007/978-3-319-57365-6_270-1">led the world</a> in recording time use, but also in recording <a href="https://pubmed.ncbi.nlm.nih.gov/24635763/">simultaneous activities</a> – what Australians do when they multitask. </p>
<p>In <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/CA25687100069892CA256889001D5545/$File/41530_1997.pdf">1997</a> the survey found that whereas the average time spent on childcare as a main activity was about two hours per day, the average when simultaneous activities were taken into account was closer to seven hours per day. Among the simultaneous activities were preparing meals and washing clothes.</p>
<p>In 2013 the scheduled five-yearly update was shelved to make budget savings. It wasn’t revived until 2020-21, but amidst the chaos of COVID, physical diaries were replaced with <a href="https://www.abs.gov.au/statistics/people/people-and-communities/how-australians-use-their-time/latest-release">online diaries</a> without an expectation they be completed in real time.</p>
<h2>Online, without context</h2>
<p>Now the bureau wants to keep it that way. It has told a meeting of stakeholders it plans to conduct the survey each year instead of once every five years, but online rather than via diaries in order to make it less tiring for respondents. It would be cheaper too.</p>
<p>It also wants to exclude simultaneous activities. </p>
<p>This means we will no longer get a good read on the total amount of childcare and other domestic activities we are doing. Our surveys will also no longer be <a href="https://ec.europa.eu/eurostat/documents/3859598/9710775/KS-GQ-19-003-EN-N.pdf/ee48c0bd-7287-411a-86b6-fb0f6d5068cc?t=1554468617000">directly comparable</a> to those of other countries.</p>
<p>Missing as well would be contextual information such as who else is present, location, mode of transport, and use of mobile phones and other devices.</p>
<p>Time-use expert <a href="https://findanexpert.unimelb.edu.au/profile/797835-lyn-craig">Lyn Craig</a> of the University of Melbourne says that without the contextual data the bureau proposes to leave out we won’t be able to capture the full dimensions of care work, including whether the breakdown by gender is changing.</p>
<p><a href="https://www.une.edu.au/staff-profiles/hass/mbittman">Michael Bittman</a>, who was seconded to the ABS for the first national time use survey and has chaired United Nations committees on time-use methodology, says the proposed changes will “take Australia from being a leader to a laggard”.</p>
<h2>Lighter than the world’s lightest</h2>
<p>The International Labour Organisation has designed a <a href="https://www.ilo.org/wcmsp5/groups/public/---dgreports/---stat/documents/publication/wcms_635909.pdf">light</a> one-day time use survey that will take just 15 minutes to complete, intended for poor countries.</p>
<p>What Australia’s bureau is proposing looks as if it will take even less time, making it one of the poorest time use surveys on the planet.</p>
<p>The survey needn’t be annual, as year-on-year changes are usually small. A substantial survey conducted once every five years would be much better.</p>
<p>Where the bureau thinks a survey is important, it invests in solutions, including face-to-face surveys if necessary. That’s what it does with Australia’s six-yearly <a href="https://www.abs.gov.au/statistics/economy/finance/household-expenditure-survey-australia-summary-results/latest-release">Household Expenditure Survey</a>, the one used to determine what Australians spend their money on, which forms an input to the consumer price index.</p>
<h2>It’s a question of priorities</h2>
<p>That expenditure survey has a two week diary which requires far more work on the part of the respondent than the time use survey, including access to mortgage documents and piles of bills.</p>
<p>If the bureau remains committed to doing the time use survey online, it should do it in a way consistent with the best practice in the rest of the world. </p>
<p>International researchers are developing an <a href="https://link.springer.com/article/10.1007/s11205-017-1569-5">electronic light diary</a> that collects information about secondary activities and contexts. It has been <a href="https://journals.sagepub.com/doi/full/10.1177/0081175019884591">approved for use</a> in nine countries.</p>
<p>Those who specialise in time-use research say the bureau’s current plan is destined to fail. There’s a good deal of women’s unpaid work it won’t capture.</p>
<p>In 1988 New Zealand economist Marilyn Waring wrote a famous book called <a href="https://marilynwaring.com/publications/counting-for-nothing.asp">Counting for Nothing</a> about how women and the environment were invisible in policymaking.</p>
<p>If the bureau proceeds as planned, it will take us back toward those days.</p>
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Read more:
<a href="https://theconversation.com/a-decade-after-the-arrival-of-the-smartphone-were-about-to-find-out-how-we-use-our-time-107195">A decade after the arrival of the smartphone, we're about to find out how we use our time</a>
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<p><em>Correction: this article previously said the ABS conducts its Household Expenditure Survey face-to-face. Recent household expenditure surveys have been conducted using a computer-assisted interview questionnaire in the first instance and face-to-face interviews where needed to improve response rates.</em></p><img src="https://counter.theconversation.com/content/223453/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Julie Smith is a member of the ABS Time Use Expert Reference Group. </span></em></p><p class="fine-print"><em><span>Marian Sawer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Bureau of Statistics is considering scaling back the scope of Australia’s time-use survey in a way that will make it difficult to tell how much time we spend caring for children.Julie P. Smith, Honorary Associate Professor, Australian National UniversityMarian Sawer, Emeritus Professor, School of Politics and International Relations, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2215902024-01-23T10:17:21Z2024-01-23T10:17:21ZWhy Australian workers’ true cost of living has climbed far faster than we’ve been told<figure><img src="https://images.theconversation.com/files/570806/original/file-20240123-17-b03k46.png?ixlib=rb-1.1.0&rect=1941%2C1225%2C1794%2C862&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Why is Prime Minister Anthony Albanese suddenly so keen to deliver extra cost-of-living relief – keen enough to summon Labor members of parliament to Canberra for a briefing on Wednesday, followed by a <a href="https://www.npc.org.au/speaker/2024/1281-the-hon-anthony-albanese-mp">National Press Club</a> address on Thursday?</p>
<p>One immediate reason is he is keen to make sure Labor wins the upcoming byelection in the outer-Melbourne electorate of Dunkley on <a href="https://www.abc.net.au/news/elections/dunkley-by-election-2024">March 2</a>.</p>
<p>But the cost of living wouldn’t matter much for Dunkley – and it wouldn’t matter much for the rest of us – unless it was really biting.</p>
<p>And despite what the treasurer himself has been trying to tell us, it is biting.</p>
<p>Treasurer Jim Chalmers has been pointing out that in the June quarter and the September quarter (the three months to June and to September) real wages <a href="https://twitter.com/JEChalmers/status/1744264941727793619">grew</a> for the first time in years. By that he means that the <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">wages index</a> compiled by the Bureau of Statistics began growing faster than the <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">consumer price index</a>.</p>
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<p>It’s better than growing more slowly, but it tells us next to nothing about what’s happening to buying power. Here’s why.</p>
<h2>Why CPI understates today’s living costs</h2>
<p>Way back in the late 1990s, more than a quarter of a century ago, the consumer price index (<a href="https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162">CPI</a>) used to actually reflect the cost of living. It included all of the big costs incurred by households, including – importantly – mortgage interest payments. At the time, mortgages accounted for an average of <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/10F150019D15C748CA2571CC000CB34A/$File/64530_1997.pdf">$5</a> of every $100 each wage earner spent.</p>
<p>Then in <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6453.01997?OpenDocument">September 1998</a>, in response to representations from the Reserve Bank and the Treasury, the bureau changed the way it calculated the index. It <a href="https://images.theconversation.com/files/570734/original/file-20240122-23-dkqq0f.png">excluded</a> mortgage and other interest payments, in a decision it acknowledged would make the index worse at measuring living costs.</p>
<p>It still carries the warning on its <a href="https://www.abs.gov.au/methodologies/selected-living-cost-indexes-australia-methodology/jun-2023">website</a>, saying the consumer price index is </p>
<blockquote>
<p>not the conceptually ideal measure for assessing the changes in the purchasing power of the disposable incomes of households.</p>
</blockquote>
<p>The index actually does a pretty good job of measuring changes in living costs at times when mortgage rates aren’t much changing. But at times when they are tumbling, it’ll overestimate living costs. And when mortgage rates are soaring – as they have been lately – it will way understate what’s happening to living costs.</p>
<p>We know by how much. For years, the bureau has also published a separate set of measures it pointedly calls “<a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release">living cost indexes</a>”. These <em>do</em> include mortgage and other interest charges, and for households headed by employees (for whom the buying power of wages matters) they are substantial.</p>
<h2>Living costs are up 9%, rather than 5.4%</h2>
<p>While the consumer price index (the one quoted by the treasurer) increased 5.4% in the year to September, the living cost index for households headed by wage earners climbed <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release">9%</a>.</p>
<p>For these working households, the price of food climbed 4.8% in the year to September, the price of electricity <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">14.5%</a> and the price of mortgage interest charges <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/sep-2023/646703.xlsx">68%</a>. </p>
<p>It’s the increases in mortgage rates that have made the increases in the other prices hurt so much.</p>
<p>The overall increase in prices faced by wage-earners – 9% – is way above the typical wage increase of <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">4%</a>.</p>
<p>Bill Mitchell of the University of Newcastle points out that on this measure, the correct one, the buying power of wages has been falling for two and a half years. He says it puts the treasurer’s comments in a <a href="https://billmitchell.org/blog/?p=61493">wholly different light</a>.</p>
<h2>Why we should distrust the CPI</h2>
<p>Working Australians are right to distrust the consumer price index, which is something the Australian Council of Social Service <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/10F150019D15C748CA2571CC000CB34A/$File/64530_1997.pdf">warned the bureau about</a> when it made the change.</p>
<p>Each month, the Melbourne Institute asks Australians whether their family finances have deteriorated over the previous year. Usually, about one-third of those surveyed say they have.</p>
<p>But for more than a year now, around 50% of those surveyed have been saying their finances have got worse. That’s a peak not seen since the global financial crisis, and one that has lasted longer.</p>
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<p>Asked about family finances over the next 12 months, more than 30% say they’ll worsen further. It’s usually 20%.</p>
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<p>Looked at from today’s perspective, the arguments put forward in 1997 for weakening the consumer price index as a measure of living costs are unimpressive.</p>
<p>Back then, the <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/10F150019D15C748CA2571CC000CB34A/$File/64530_1997.pdf">Treasury</a> noted that many welfare recipients didn’t have mortgages and that a consumer price index that excluded them would better reflect their living costs.</p>
<p>The <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/10F150019D15C748CA2571CC000CB34A/$File/64530_1997.pdf">Reserve Bank</a> argued interest rates were “conceptually
different from other prices”. In any event, it wanted them excluded because it found it hard to use higher interest rates to bring down inflation if those higher rates pushed the measure of inflation up.</p>
<p>The change attracted <a href="https://cdn.theconversation.com/static_files/files/3008/colebatchage.pdf">little attention</a> at the time, because mortgage rates weren’t moving much. By the time they did, the change had been bedded down.</p>
<h2>But here’s some good news</h2>
<p>For most of the time since the change, mortgage rates have either increased gradually or been cut, meaning the difference between what the consumer price index has been telling us and what’s been happening to us hasn’t been too stark. It’s been stark lately because interest rates have been rising quickly.</p>
<p>The good news – and there is good news – is that financial markets expect rates to <a href="https://www.asx.com.au/markets/trade-our-derivatives-market/futures-market/rba-rate-tracker">begin falling</a> this year, with the next move down. </p>
<p>Inflation as measured by the consumer price index (inflation excluding mortgage rates) is already falling.</p>
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<p>We get the next official update on the consumer price index <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">next week</a> (and the update for the lesser-known <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/sep-2023">living cost indexes</a> a week after that).</p>
<p>It makes now a particularly good time to announce measures to address the cost-of-living crisis. We need them because we really are in something of a crisis. Things are a lot worse than the official index suggests. </p>
<p>And there’s a chance that soon they’ll begin to get better, allowing the prime minister to claim a win.</p><img src="https://counter.theconversation.com/content/221590/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin is economics editor of The Conversation AU.</span></em></p>The official figures tell us inflation is 5.4%. But for working families, it’s actually 9%. Yet there is some good news ahead.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2126422023-09-06T06:15:02Z2023-09-06T06:15:02ZPer capita recession as Chalmers says GDP ‘steady in the face of pressure’<p>Australia’s economy grew a mere <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/jun-2023">0.4%</a> in the June quarter according to figures released by the Bureau of Statistics on Wednesday, a performance Treasurer Jim Chalmers describes as “steady in the face of unrelenting pressure”.</p>
<p>The lacklustre growth follows growth of 0.4% the previous quarter, and is a step down from the growth of 0.7% in the quarters that preceded it, presenting a stark reminder of the economic challenges caused by rising interest rates as the Reserve Bank attempts to reign in inflation.</p>
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<p>If growth continued at that pace for another two quarters, the annual growth rate would barely reach 1.6%, an alarmingly low figure that. For many Australians it probably feels like a recession, because all of the growth was accounted for by population growth, meaning gross domestic product (GDP) per person fell by 0.3% in both March and the June quarters, in a so-called “<a href="https://www.amp.com.au/content/dam/amp-au/documents/insights/recession-risk-oi-16-2023v2.pdf">per capita recession</a>”.</p>
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<p>The driving force behind this tepid growth is primarily weak household consumption which grew by only 0.1% in the quarter – far less than Australia’s population. </p>
<p>Households, grappling with the increased cost of essential expenses such as fuel and rent, have resorted to cutting down on savings. </p>
<p>In the three months to June Australia’s household saving ratio plummeted to 3.2%, its lowest rate in 15 years.</p>
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<p>How is it possible to have both weak spending and weak saving at the same time? </p>
<p>The answer is that disposable (post tax) income fell by even more. </p>
<p>Real per capita disposable income fell by 2.1% in the June quarter. </p>
<p>Outside of pandemic lockdown years of 2020 and 2021, this was the biggest fall in disposable income per Australian since the 2009 global financial crisis.</p>
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<p>The Bureau of Statistics says mortgage interest expenses have almost doubled over the past year as home building (“dwelling investment”) has slid by 0.2% in the quarter and 1.1% over the year. </p>
<p>In better news, business investment has shown resilience, climbing 0.6% in the quarter, and 3.4% over the year driven, driven in part by a <a href="https://www.afr.com/policy/economy/investment-jumps-as-tradies-rush-on-ute-tax-break-20230831-p5e0z1">rush of tradies</a> attempting to upgrade their cars before a cut in the instant asset write-off limit came into effect on July 1.</p>
<p>Exports climbed 4.3% in the quarter, driven by “education exports” as international students returned.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/you-dont-have-to-be-an-economist-to-know-australia-is-in-a-cost-of-living-crisis-what-are-the-signs-and-what-needs-to-change-210373">You don't have to be an economist to know Australia is in a cost of living crisis. What are the signs and what needs to change?</a>
</strong>
</em>
</p>
<hr>
<p>Gross operating surpluses, a measure of company profits, fell by 8.6% in the quarter driven by a fall in commodity prices which drove down mining profits.</p>
<p>Pressing on profits were higher wage bills – which surged 9.9% outside of mining, reflecting both wage growth and employment growth, outstripping the 5.1% uptick in non-mining profits.</p>
<p>Lower commodity prices also drove another decline in Australia’s terms of trade which fell by 7.9%. The terms of trade measure the price of Australian’s exports relative to the price of imports, meaning that Australia is getting fewer imports for its exports – something that will inevitably feed into our standard of living.</p>
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<p>This subdued economic growth is the primary reason the Reserve Bank decided to hold interest rates <a href="https://www.rba.gov.au/media-releases/2023/mr-23-23.html">constant</a> at its board meeting yesterday. </p>
<p>The bank is expecting economic growth to decelerate to an annual rate of only <a href="https://www.rba.gov.au/publications/smp/2023/aug/pdf/forecast-table-2023-08.pdf">0.9%</a> by the end of the year, in large measure because of the series of 12 interest rate rises it has imposed since May last year.</p>
<p>One of the bank’s biggest concerns, and one of the government’s biggest concerns, is labour productivity (GDP per hour worked) which slid a further 2% in the quarter to be down <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/jun-2023">3.6%</a> over the year. </p>
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<p>The bank’s outgoing governor Philip Lowe says falling or weak productivity growth makes wage increases more likely to feed inflation, limiting his freedom to cut interest rates, a point he might address in his final speech as governor on Thursday, to be entitled <a href="https://rba.livecrowdevents.tv/SpeechbyPhilipLoweGovernorAnikaFoundation7sept">Some Closing Remarks</a>.</p>
<p>Boosting productivity – how much we produce for each hour we work – is important. Our standard of living and the pain we need to inflict to fight inflation will depend on it.</p><img src="https://counter.theconversation.com/content/212642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Isaac Gross does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Six charts explain the Australian economy. Three of the most disturbing show living standards going backwards, productivity collapsing and household saving falling to a 15-year low.Isaac Gross, Lecturer in Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2105432023-07-27T07:12:17Z2023-07-27T07:12:17ZGender, sexual orientation and ethnic identity: Australians could be asked new questions in the 2026 Census<p>August 2026 may seem like a long way away. Between now and then, there will be at least one federal election, the 2024 Paris Olympics will have been and gone, another Ashes cricket series will have taken place, and the 2026 FIFA Men’s World Cup will have just finished.</p>
<p>Planning for the August 2026 census is, however, well under way at the Australian Bureau of Statistics (ABS).</p>
<p>On Thursday, the <a href="https://www.abs.gov.au/statistics/research/2026-census-topic-review-phase-one-directions">ABS released results from the first round of consultations</a>, and gave an indication of likely directions for the 2026 census. It received 260 submissions in this phase, and some of the proposed changes are quite exciting for better understanding the nation as we enter the second quarter of the 21st century. </p>
<p>While the model <a href="https://www.abs.gov.au/census/about-census/delivering-2021-census/learning-2026">won’t</a> “fundamentally change”, the big decisions for the ABS are whether to add new questions to the survey, whether to take some away, and whether some of the questions need to be adapted.</p>
<p>The ABS flagged there could be changes to topics such as income, ethnic identity, gender and sexual orientation. The ABS is also considering dropping some questions on fertility, owner-managers, motor vehicles and unpaid work.</p>
<h2>Balancing act</h2>
<p>Governments, researchers, the media and community organisations all rely on data from the census, so changes don’t happen lightly.</p>
<p>Dropping a question from the census can have serious impacts on our ability to track changes in outcomes and leave a gap in what we know about our nation.</p>
<p>At the same time though, adding too many questions is risky. If the ABS made the census too long, the burden on the community would be unsustainable, and people may stop completing it. This poses a devilishly difficult tradeoff.</p>
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<h2>Potential removals</h2>
<p>The ABS is considering removing the question on income from the census, and instead linking to “administrative data”. What that would mean is a census record would be supplemented with tax and social security data.</p>
<p>Data linkage to the census is done routinely in other countries, and has a certain appeal. Income is one of the questions that has historically had a high <a href="https://www.abs.gov.au/census/guide-census-data/census-methodology/2021/understanding-data-quality#item-non-response-rates">non-response rate</a>, and it takes up a lot of space on the form. Plus, there’s more and more administrative data on income that can be linked to the census, which is increasingly being used in <a href="https://onlinelibrary.wiley.com/doi/full/10.1111/1467-8462.12351">research</a>. </p>
<p>But tax and social security data on income isn’t perfect and can miss people. Plus, there’s no guarantee the social licence to keep using linked administrative data will continue as people become more concerned about data privacy on the back of high profile data breaches. It’s an idea worth exploring, but not without risks. </p>
<p>There are four further topics considered for removal: </p>
<ul>
<li><p>number of children ever born</p></li>
<li><p>number of employees (employed by owner-managers)</p></li>
<li><p>number of motor vehicles in the household</p></li>
<li><p>and level of unpaid work on domestic activities.</p></li>
</ul>
<p>It isn’t that these topics aren’t interesting, but the ABS thinks there are alternative data sources available. There will undoubtedly be people who see the census as still the best method of collection for these topics, but they’re going to have to make a strong case for their retention.</p>
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<h2>What about additions?</h2>
<p>There are 12 new topics the ABS is considering for inclusion.</p>
<p>In a year in which Australia will vote on the Voice to parliament, the ABS continues to consider additional questions on Aboriginal and Torres Strait Islander cultural identity.</p>
<p>The ABS is also considering adding a topic on ethnic identity, which could be used in addition to many existing questions (like ancestry, language, country of birth) to get a richer picture of Australia’s cultural diversity. </p>
<p>However, the ABS is concerned there are differences in how people interpret the term “ethnicity”. It’s seeking feedback on whether to add an additional question, or whether to replace ancestry with ethnic identity.</p>
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<p>The ABS is also exploring whether and how to ask questions on gender, sexual orientation, and variations of sex characteristics. The census hasn’t included these questions in the past so we are reliant on <a href="https://link.springer.com/article/10.1186/s13104-020-05383-w">survey data</a> with much smaller samples to know how many LGBTQI+ people there are in the country. </p>
<p>For the first time, in 2021, the ABS made available the option for non-binary when people were asked about their sex. However, the ABS’ review of responses concluded it “<a href="https://www.abs.gov.au/articles/analysis-non-binary-sex-responses#key-messages">did not yield meaningful data</a>”.</p>
<p>There’s limited information on sexual orientation in the census, mainly by looking at someone’s relationship status and the sex of their partner. However, that misses those who are lesbian, gay, bisexual (or use a different term) and aren’t in a relationship with someone in their household.</p>
<p>The ABS recognises the importance of such a question, but one of its concerns with this topic is privacy, and answering the question with other member of the household present. Although this is understandable, it’s unclear whether this is a strong enough argument for not including it, and how attitudes on the topic will have continued to shift by 2026.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/lgbtiq-people-are-being-ignored-in-the-census-again-not-only-is-this-discriminatory-its-bad-public-policy-165800">LGBTIQ+ people are being ignored in the census again. Not only is this discriminatory, it's bad public policy</a>
</strong>
</em>
</p>
<hr>
<h2>What you can do</h2>
<p>As the <a href="https://consult.abs.gov.au/census/2026-census-topic-consultation-phase-two/">next phase of consultation is open</a>, people are encouraged to identify whether the potential new topics might be helpful, and what the risks might be in dropping or changing existing topics.</p>
<p>All Australians benefit from having a robust and relevant census. The more Australians able to give their views to the ABS, the better the census will be, and the better the decisions that will flow from the data.</p><img src="https://counter.theconversation.com/content/210543/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicholas Biddle is a member the Australian Bureau of Statistics' Australian Statistics Advisory Council.</span></em></p>The ABS is exploring whether and how to ask questions on gender, sexual orientation, and variations of sex characteristics.Nicholas Biddle, Professor of Economics and Public Policy, ANU College of Arts and Social Sciences, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2085852023-06-27T12:39:17Z2023-06-27T12:39:17ZThis year’s surplus will be bigger than the $4.2 billion projected at budget time: Chalmers<p>The surplus for the financial year that ends Friday will be larger than the $4.2 billion forecast in the budget, Treasurer Jim Chalmers will say on Wednesday. </p>
<p>In a speech to be delivered in Darwin, Chalmers says the government had been “deliberately cautious” in its estimate in the budget, “given the history”. This was a reference to former Treasurer Josh Frydenberg’s “back in black” prediction in 2019. </p>
<p>Now, “We’re in a significantly better position than we forecast,” Chalmers says. “We’re expecting the surplus will be bigger than forecast in May.” </p>
<p>The surplus upgrade has enabled the government to recently announce $2 billion for housing, distributed to the states and territories before the end of the financial year. </p>
<p>The good news on the surplus comes as Australian Bureau of Statistics figures on Wednesday will reveal how the fight against inflation is progressing. Next week the Reserve Bank will consider whether to raise interest rates yet again.</p>
<p>The cash rate is currently 4.1%, after the Reserve Bank has hiked rates a dozen times, most recently early this month. </p>
<p>Rating agency S&P Global said this week: “We expect the Reserve Bank of Australia to raise its policy rate further this year.” </p>
<h2>Fadden byelection</h2>
<p>Meanwhile, the government and opposition are gearing up for another byelection test, this time in the Liberal Gold Coast seat of Fadden, vacated by Stuart Robert, one of the ministers who oversaw Robodebt. </p>
<p>Opening Labor’s campaign on Tuesday night, Prime Minister Anthony Albanese homed in on Robert.</p>
<p>“Stuart Robert is resigning from parliament having presided over one of the most shocking and cruel failures in the history of Australian politics – Robodebt,” Albanese said.</p>
<p>“Ripping the humanity out of human services. Stripping the social justice from social security. Targeting vulnerable people – and bragging about it. </p>
<p>"That’s the sort of person Peter Dutton thought was good enough for his shadow ministry. And that’s the sort of candidate the LNP thought was good enough for your community. Those are the policies and values they put forward to represent you, time and time again.”</p>
<p>Fadden is on a margin of 10.6%. Although both sides expect the Coalition to hold it on July 15, a swing against the Liberal National Party would be another blow for Dutton, after the disastrous loss of the Liberal seat of Aston in Victoria. </p>
<p>The LNP is putting considerable resources into its Fadden campaign. There were mixed views in Labor about whether to contest the seat, but the local party was anxious to do so, because it overlaps areas important in the state election in 2024.</p>
<p>A swing against Labor would be interpreted, in part, as having implications for the Voice referendum. </p>
<p>Dutton said on Tuesday the byelection was “an opportunity to send the government a message in relation to cost of living, that you’re not happy with the policies that they’ve presided over – and also on the Voice.</p>
<p>"I think there will be a lot of people in Fadden who want to send the Prime Minister a very clear message that they’re not happy with his Canberra Voice proposal, and they’re not happy that he’s continuing to keep details from Australians in relation to how the Voice will operate.”</p>
<p>Labor’s candidate in Fadden, Letitia Del Fabbro, who ran at the 2022 election, is a nurse educator. The LNP candidate is Cameron Caldwell, a Gold Coast councillor.</p><img src="https://counter.theconversation.com/content/208585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In a speech to be delivered in Darwin, Chalmers says the government had been deliberate in its estimate in the budget. Now, “We’re in a significantly better position than we forecast.”Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2017582023-03-15T04:14:35Z2023-03-15T04:14:35ZNew data shows 1 in 3 women have experienced physical violence and sexual violence remains stubbornly persistent<p>Eight million Australians have experienced violence since the age of 15, according to new findings of the fourth <a href="https://www.abs.gov.au/statistics/people/crime-and-justice/personal-safety-australia/2021-22">Personal Safety Survey</a> released today by the Australian Bureau of Statistics. </p>
<p>The results confirm that domestic, family and sexual violence remain a national crisis in Australia. </p>
<p>Headline findings show that since the age of 15 years old:</p>
<ul>
<li><p>one in four women, and one in 14 men, have experienced intimate partner violence </p></li>
<li><p>one in five women, and one in 16 men, have experienced sexual violence </p></li>
<li><p>one in three women, and two in five men, have experienced physical violence </p></li>
<li><p>one in five women, and one in 15 men, have experienced stalking. </p></li>
</ul>
<p>The Personal Safety Survey collected data from 12,000 Australian women and men on the form and extent of violence they had experienced since the age of 15. Only Australians over the age of 18 were surveyed. </p>
<p>This survey is unique because it captures people’s experiences from March 2021 and May 2022, during the height of the pandemic. Schools were closed across the country and many cities had extensive lockdown periods with work-from-home mandates that reduced interactions between colleagues. </p>
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<h2>The gendered nature of violence</h2>
<p>The findings provide further evidence that violence in Australia is gendered. Women are more likely to experience all forms of violence within an intimate partner relationship, including physical, sexual, emotional and economic abuse. Men are more likely to experience violence from strangers. </p>
<p>Women are more likely to experience childhood abuse, both physical and sexual, with 18% of women and 11% of men reporting such an experience during their childhood. </p>
<h2>How is violence changing in Australia?</h2>
<p>The pandemic means the survey findings should be interpreted with caution, and context is key. Many questions, for instance, focused on experiences of violence in the previous 12 months, which for many Australians will have included lockdown periods.</p>
<p>The findings do indicate a reduction in physical and emotional violence experienced by men and women compared to the 2016 findings. There was also a reduction in the prevalence of sexual harassment and stalking. </p>
<p>However, we need to remember the reduced use of public spaces and workplaces during the pandemic, as well as changes in people’s lifestyles. This could be a reason why victimisation rates were lower during this time. </p>
<p>The survey shows, however, that rates of sexual violence remained stubbornly persistent. This highlights the importance of the National Plan to End Violence against Women and Children’s commitment to bring “<a href="https://www.dss.gov.au/sites/default/files/documents/11_2022/national_plan_to_end_violence_against_women_and_children_2022-2032.pdf">addressing sexual violence out of the shadows</a>”.</p>
<p>For the first time, the survey also captured economic abuse by partners who lived together, which is defined as behaviours or actions “aimed at preventing or controlling a person’s access to economic resources, causing them emotional harm or fear”. </p>
<p>The survey shows that one in six women and one in 13 men have experienced this type of abuse since the age of 15. </p>
<h2>Hidden victimisation: what we don’t know</h2>
<p>Among the limitations of the survey is that it does not collect data specifically on the experiences of First Nations people. Budget commitments have been made for the Australian Bureau of Statistics to develop the first Aboriginal and Torres Strait Islander Personal Safety Survey. This is critically needed. </p>
<p>The findings today also do not capture the rate of violence specifically experienced by Australians with <a href="https://theconversation.com/lgbtq-people-are-being-ignored-in-the-national-discussion-on-family-and-sexual-violence-167634">diverse gender and sexual identities</a>, as well as people with disability. </p>
<p>There are also limits in the data collected in very remote areas of Australia. The findings do not provide information about differences in urban and non-urban victimisation rates. In a country as geographically dispersed as Australia, we need these insights. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/were-missing-opportunities-to-identify-domestic-violence-perpetrators-this-is-what-needs-to-change-198071">We're missing opportunities to identify domestic violence perpetrators. This is what needs to change</a>
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</em>
</p>
<hr>
<p>Findings from the <a href="https://alswh.org.au">Australian Longitudinal Study on Women’s Health</a>, for instance, reveal the lifetime prevalence rate of domestic violence is <a href="https://theconversation.com/country-women-are-more-likely-to-experience-intimate-partner-violence-49049">higher in rural, regional and remote areas</a> than in cities. </p>
<p>Also absent are the voices of Australians under the age of 18. Given the National Plan to End Violence against Women and Children’s call <a href="https://theconversation.com/to-end-gender-based-violence-in-one-generation-we-must-fix-how-the-system-responds-to-children-and-young-people-192839">for children to be recognised as victim-survivors in their own right</a>, this is a notable gap. </p>
<p>Survey participants do reflect on prior experiences of child abuse and witnessing parental violence before the age of 15. It found: </p>
<ul>
<li><p>one in six women, and one in nine men, experienced childhood abuse</p></li>
<li><p>one in six women, and one in nine men, witnessed parental violence during childhood. </p></li>
</ul>
<p>Engaging children in this type of data collection can be challenging, but we need to improve our understandings of their experiences of violence and make space for <a href="https://bridges.monash.edu/articles/report/I_believe_you_Children_and_young_people_s_experiences_of_seeking_help_securing_help_and_navigating_the_family_violence_system/21709562">their voices</a> in national conversations. </p>
<p>It’s encouraging to see the survey now including a wider range of harms. For future iterations, however, we also need information about <a href="https://eprints.qut.edu.au/199781/1/V1_Briefing_Paper_template.pdf">technology-facilitated abuse</a>, including using digital media and devices to abuse, harass and stalk and non-consensual sharing of images.</p>
<p>We must also ensure the survey captures different forms of intimate partner violence that happen within the one abusive relationship. Presently, the survey only records discrete acts and incidents of violence. However, <a href="https://aifs.gov.au/webinars/power-understanding-patterns-coercive-control">research</a> shows that many abusive behaviours are interconnected and occur as a pattern of abuse.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-it-comes-to-family-violence-young-women-are-too-often-ignored-190547">When it comes to family violence, young women are too often ignored</a>
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<h2>The need for more investment</h2>
<p>The survey provides evidence of the scale of the problem of violence in the country. There is an urgent need to bolster funding and initiatives that prevent and respond to all forms of gender-based violence. </p>
<p>Advocates have critiqued the government’s commitment of A$386 billion for nuclear-powered submarines under the AUKUS deal. In comparison, less than 1% of that has been invested in tackling violence against women, despite the national plan’s pledge last year to <a href="https://theconversation.com/to-end-gender-based-violence-in-one-generation-we-must-fix-how-the-system-responds-to-children-and-young-people-192839">eliminate gender-based violence in one generation</a>. </p>
<p>Personal Safety Surveys will continue to document the gendered dimension of violence in Australia and the insecurity of women’s lives unless we tackle the underlying causes of violence. This survey must be a call to increase our focus on preventing violence and <a href="https://www.pmc.gov.au/resources/status-women-report-card-2023">dismantling gender inequality</a> in all settings across Australia.</p><img src="https://counter.theconversation.com/content/201758/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate receives funding for family violence related research from the Australian Research Council, Australian Institute of Criminology, Australia's National Research Organisation for Women's Safety, the Victorian Government and the Department of Social Services. In 2021 Kate led the National Plan Stakeholder and Victim-Survivor Advocates Consultation Projects. This piece is written by Kate Fitz-Gibbon in her capacity as Director of the Monash Gender and Family Violence Prevention Centre and are wholly independent of Kate Fitz-Gibbon’s role as Chair of Respect Victoria. </span></em></p><p class="fine-print"><em><span>Bridget Harris receives funding for family violence and technology-facilitated abuse research from the Australian Research Council and Department of Infrastructure, Transport, Regional Development, Communication and the Arts and has previously received funding from The eSafety Commissioner and the Australian Institute of Criminology. </span></em></p>The new Personal Safety Survey shows eight million Australians have experienced some form of violence since the age of 15, but women are far more likely to be victims than men.Kate Fitz-Gibbon, Director, Monash Gender and Family Violence Prevention Centre; Professor of Social Sciences, Faculty of Arts, Monash UniversityBridget Harris, Associate professor, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2012812023-03-07T05:26:24Z2023-03-07T05:26:24ZWhy RBA interest rate hikes could end by September – but brace for at least one more<figure><img src="https://images.theconversation.com/files/513894/original/file-20230307-24-9lwkg2.png?ixlib=rb-1.1.0&rect=448%2C275%2C3543%2C1627&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>Tuesday’s tenth successive Reserve Bank interest rate hike is the culmination of a process that has added $1,080 to the monthly cost of payments on a $600,000 variable mortgage.</p>
<p>I’ve calculated this increase in payments – which amounts to $12,960 per year – by comparing payments on the National Australia Bank’s base variable mortgage rate before the Reserve Bank started its series of hikes in May 2022 with payments after the NAB lifts its rates in accordance with Tuesday’s decision.</p>
<p>Before the Reserve Bank started hiking in May 2022, the NAB rate was <a href="https://web.archive.org/web/20220419010208/https://www.nab.com.au/personal/home-loans/offers">2.19%</a>. After nine Reserve Bank hikes, ahead of Tuesday’s meeting, it was <a href="https://www.nab.com.au/personal/home-loans/offers">5.24%</a>.</p>
<p>It will soon be <a href="https://www.nab.com.au/personal/home-loans/offers">5.49%</a>, meaning the monthly payment on a 25-year $600,000 NAB base variable mortgage will have climbed from $2,600 to $3,680.</p>
<p>And Tuesday’s <a href="https://www.rba.gov.au/">statement</a> from the Reserve Bank indicates there’s more to come.</p>
<p>But an end to these rate rises is within sight – possibly as soon as mid-September.</p>
<h2>Bank on at least 1 more rate rise</h2>
<p>The best guide to what the Reserve Bank has in mind is usually the first few words of the <a href="https://www.rba.gov.au/media-releases/2023/mr-23-07.html">final paragraph</a> of its statement.</p>
<p>Last time, in February, those words referred to further interest rate “<a href="https://theconversation.com/rba-warns-of-at-least-2-more-interest-rate-rises-in-coming-months-as-the-economic-outlook-worsens-199272">increases</a>”, making it clear the bank expected more than one.</p>
<p>This time, there’s no plural. The sentence refers merely to “further tightening”, which could mean as little as one more increase, and not necessarily next month.</p>
<p>The statement, like the last, says rate hikes work “with a lag, and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments”. That’s a reference to the large number of borrowers who are about to be hit with higher payments as they come off low fixed rates.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-lowe-road-the-rba-treads-a-narrow-path-199519">The Lowe road – the RBA treads a 'narrow path'</a>
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</em>
</p>
<hr>
<p>And, unlike the last statement, this one says inflation may have peaked.</p>
<p>So there are reasons for easing off, but also – as I’ll explain shortly – important institutional forces propelling Governor Philip Lowe to keep going.</p>
<h2>Reasons for easing off on further rate hikes</h2>
<p>The whole point of the dramatic interest rate hikes has been to make sure Australia’s sudden reemergence of high inflation is <a href="https://www.rba.gov.au/speeches/2023/sp-gov-2023-02-17.html">only temporary</a>.</p>
<p>Inflation hit <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">7.8%</a> in December, well outside the Reserve Bank’s 2-3% target zone and the most since 1990.</p>
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<p>The good news is to the extent that inflation comes from overseas in the prices for fuel and other imports, it seems to be easing. </p>
<p>US inflation has been falling for seven months now, from a high of 9.1% in June to <a href="https://tradingeconomics.com/united-states/inflation-cpi">6.4%</a> in January. UK inflation has been falling for three months, from 10.1% to <a href="https://tradingeconomics.com/united-kingdom/inflation-cpi">9.1%</a>.</p>
<p>To the extent that inflation is driven by a surge in spending at home, that surge has stopped. Retail spending has been <a href="https://www.abs.gov.au/statistics/industry/retail-and-wholesale-trade/retail-trade-australia/latest-release#total-retail-turnover">flat</a> (unchanged) for four months notwithstanding a growing population and growing prices. </p>
<h2>We’re winding back spending</h2>
<p>This means what’s bought per person is falling, as would be expected if we were tightening our belts in response to higher interest rates and higher prices.</p>
<p>In February consumer confidence, as measured by Westpac and the Melbourne Institute, dived to its <a href="https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/economics-research/er20230214BullConsumerSentiment.pdf">lowest point</a> since the 2020 COVID recession.</p>
<p>Asked whether now was a good time to buy a major household item, only 17% of Australians surveyed said yes. Twice as many – 39% – said no.</p>
<p>Last week’s national accounts showed gross domestic product, the official measure of everything earned, bought and sold in the economy, climbing only <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">0.5%</a> in the three months to December.</p>
<p>But buried in the fine print was something worse. Were it not for a <em>fall</em> in imports in the December quarter, GDP would have gone backwards. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/rbas-latest-forecasts-are-grim-here-are-5-reasons-why-199509">RBA's latest forecasts are grim. Here are 5 reasons why</a>
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</em>
</p>
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<p>It is one of the truly bizarre mathematical oddities of the way the GDP is calculated that a fall in imports boosts measured GDP, even though it is a sign we are tightening our belts.</p>
<p>And we’ve been having to tighten our belts. Wage figures released since February’s board meeting show growth of just <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-in">3.3%</a> in the year to December, way below the increase in prices, and way below the entrenched growth of 5% the governor has said <a href="https://parlinfo.aph.gov.au/parlInfo/download/committees/commrep/26560/toc_pdf/Economics%20Committee_2023_02_17.pdf">would concern him</a>.</p>
<p>One of the reasons wages aren’t yet climbing particularly fast is that (unusually) wage earners expect inflation to fall. Throughout most of its life, the Melbourne Institute survey of <a href="https://melbourneinstitute.unimelb.edu.au/publications/macroeconomic-reports/latest-news/survey-of-consumer-inflationary-and-wage-expectations">inflation expectations</a> has pointed to higher inflation than was actually experienced. At the moment it is pointing to lower inflation.</p>
<p>Nevertheless, the RBA board “remains alert to the risk of a prices-wages spiral” according to Tuesday’s statement. This implies it isn’t yet reassured by the official figures and that its <a href="https://www.rba.gov.au/publications/podcast/#">liaison program</a> with 600 or so business operators has identified increases yet to come.</p>
<h2>6 months left to leave a legacy</h2>
<p>That’s the economics, which points to taking things gently on rate rises from here on. But as I mentioned, there’s something else at play that might propel Governor Lowe to keep going a little further.</p>
<p>Governor Lowe’s five-year term expires on September 17. As his predecessor did, he would like to hand over the bank in good order.</p>
<p>That means having clearly broken the back of runaway inflation. It might mean going harder for longer on interest rate rises than he otherwise would to get things in order. It’s what his predecessor did for him in August 2016. </p>
<p>Glenn Stevens cut interest rates one last time before he left office to make sure Lowe didn’t take over the bank having to do it himself. Lowe left rates unchanged for almost three years. He had been handed the keys to a car in working order.</p>
<p>Seen this way, Lowe’s determination to be sure inflation is on the way down before leaving office is a matter of etiquette. He has six months left to get his house in order.</p>
<p>It’s a consideration that might mean more mortgage rate pain than would have been the case had Lowe not been near the end of his term.</p><img src="https://counter.theconversation.com/content/201281/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Reserve Bank’s statement indicates there aren’t too many rate rises left. History suggests those hikes could come to an end by early spring.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1900472022-09-13T20:04:11Z2022-09-13T20:04:11ZWomen who suffer domestic violence fare much worse financially after separating from their partner: new data<figure><img src="https://images.theconversation.com/files/483151/original/file-20220907-22-f86cf9.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5643%2C3759&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>We recently published <a href="https://paulramsayfoundation.org.au/wp-content/uploads/2022/07/TheChoice-violence-or-poverty-web.pdf">two</a> <a href="https://csrm.cass.anu.edu.au/sites/default/files/docs/2022/5/HILDAResultsMay122022.pdf">reports</a> that highlight the devastating financial consequences borne by women who leave their partners after suffering domestic violence.</p>
<p>We found women who experienced domestic violence fared much worse financially after separating from their partner compared to those who didn’t face such violence, for women both with and without children.</p>
<p>Before separation, mothers who experienced domestic violence had about the same household income as mothers who didn’t. But after separation, the mothers who experienced domestic violence on average suffered a significantly higher drop in income of 34%, compared with a 20% decrease for mothers who didn’t experience domestic violence.</p>
<p>It’s the first time in Australia (to the best of our knowledge) that we have specific data on what happens financially to these women.</p>
<p>Our results highlight the terrible option facing those who are experiencing domestic violence: to stay in a violent relationship, or leave and face a major decline in financial wellbeing.</p>
<h2>What we studied</h2>
<p>The first report, <a href="https://www.violenceorpoverty.com/">The Choice: Violence or Poverty</a> by Anne Summers, presents previously unreported data from the Australian Bureau of Statistics (ABS) 2016 Personal Safety Survey.</p>
<p>The data reveal that of all women who’d ever been in a partnership, 22% have experienced violence from a current or previous partner. And, of single mothers living with children under 18 years of age, a staggering 60% had experienced physical violence, and 70% emotional abuse, from a partner they had previously cohabited with.</p>
<p>The data also show 50% of these now single mothers live in poverty, relying on government benefits such as JobSeeker as their main source of income.</p>
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<p>It’s important to note the ABS figures come from what’s known as a “cross-section”, which means they reflect circumstances at a given point in time (2016). They can’t tell us what happens to women over time, or the immediate effects of domestic violence on their separation and/or income. This is a critical issue for domestic violence policy.</p>
<p>Understanding the dynamics of the financial situation of victim-survivors requires what’s known as “panel data”. This issue is addressed in the <a href="https://csrm.cass.anu.edu.au/sites/default/files/docs/2022/5/HILDAResultsMay122022.pdf">second report</a> by Bruce Chapman and Matthew Taylor, where we analyse the Household Income and Labour Dynamics of Australia (HILDA) survey. HILDA is Australia’s best longitudinal data set, meaning it surveys the same people over time. To date, HILDA has followed around 19,000 people from 2002 to 2021. </p>
<p>We analysed HILDA data looking at the financial consequences for women likely to have experienced domestic violence. We covered both mothers and women who don’t have children.</p>
<p>HILDA doesn’t ask questions about the origins of violence experienced directly. So we had to devise a method of identifying separation due to domestic violence by linking the date of separation to reporting of an incident of violence: the presumption being that the incident was domestic violence (rather than, say, a street crime).</p>
<p>The report uses averages before and after separation of the three income categories, all measured in annual terms:</p>
<ul>
<li>the partner’s contribution to household income</li>
<li>the woman’s wages and salaries</li>
<li>and total government financial support received by women.</li>
</ul>
<h2>What we found</h2>
<p>In dollar terms, the drop in household income (which measures the total of all income) for mothers who experienced domestic violence after separation was from $54,648 to $35,921 a year.</p>
<p>There was also a fall in the household income for separating mothers not subject to domestic violence. But this fall is about $7,500 less compared to mothers who experienced domestic violence. </p>
<p>We also looked at the changes to a particular component of household income, the wages and salaries of the mothers (again, following separation). Similarly, we found those who’d gone through domestic violence fared far worse than those who didn’t.</p>
<p>It was expected the wages and salaries of women would increase on average after separation because of their need to compensate for the loss of the former partner’s income. But the extent to which this happened is quite different depending on whether or not the women experienced domestic violence.</p>
<p>Specifically, the wage and salary increase for mothers who’d experienced domestic violence was just 19% (from $11,526 to $13,747). But the wage and salary increase for mothers who hadn’t experienced domestic violence was much greater at 45% (from $14,414 to $20,838). </p>
<p>This means that these now single mothers who experienced domestic violence are considerably worse off financially than single mothers who didn’t face such violence.</p>
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<p>When the pre- and post-separation incomes of women without children are examined, the findings are similar to those for mothers, but with even greater losses for childless women who’d experienced domestic violence compared to childless women who hadn’t. Childless women who experienced domestic violence suffered an extraordinary 45% drop in household incomes, compared with 18% for childless women who didn’t experience domestic violence.</p>
<p>The relatively large loss in household income for childless women is the result of significant differences in the post-separation income levels between childless women, depending on their experience of domestic violence.</p>
<p>Childless women who hadn’t experienced domestic violence had an average increase of 68% in their wage and salary incomes (to about $38,000) after separation. But childless women who’d experienced domestic violence had an actual decrease in wage and salary incomes of around 20% on average (to about $13,000).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-victims-of-domestic-abuse-dont-leave-four-experts-explain-176212">Why victims of domestic abuse don't leave – four experts explain</a>
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</em>
</p>
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<p>A different way of illustrating the issue is the recognition that experiencing domestic violence doubles the likelihood of victim-survivors ending up in the bottom quarter of the income distribution.</p>
<p>We found around 50% of the women included in the data who have faced domestic violence and separated from their partners end up in the bottom quarter of the income distribution.</p>
<p>The <a href="https://paulramsayfoundation.org.au/wp-content/uploads/2022/07/TheChoice-violence-or-poverty-web.pdf">ABS data</a> reports a similar outcome, with 48.1% of now single mothers with children being in the lowest fifth of the income distribution.</p>
<h2>More research and better data needed</h2>
<p>These two reports have dug deeply into available data and unearthed findings of tremendous significance, results that reinforce each other. </p>
<p>While these findings have been rigorously tested and found to be statistically significant, the sample sizes for the longitudinal data are small.</p>
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<p>This is currently the best available longitudinal data capturing incomes. But as both reports have highlighted, data collection in the field of domestic violence needs to be expanded considerably if we’re to have more comprehensive information on longer-term outcomes.</p>
<p>We urgently need a national longitudinal study of social behaviour and experience that probes the consequences of domestic violence (with respect to perpetrators as well as victims) and the financial, employment and health outcomes for all concerned, including the children caught up in these violent relationships.</p><img src="https://counter.theconversation.com/content/190047/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anne Summers receives funding from the Paul Ramsay Foundation.</span></em></p><p class="fine-print"><em><span>Bruce Chapman and Matthew Taylor do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After separation, mothers who experienced domestic violence on average suffered a drop in income of 34%, compared with a 20% decrease for mothers who didn’t experience domestic violence.Bruce Chapman, Director, Policy Impact, College of Business and Economics, Australian National UniversityAnne Summers, Professor, UTS Business School, University of Technology SydneyMatthew Taylor, Senior Research Specialist and PhD Candidate, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1899512022-09-07T07:39:57Z2022-09-07T07:39:57ZAustralia’s June quarter national accounts show GDP doing well - for now<figure><img src="https://images.theconversation.com/files/483188/original/file-20220907-16-6xdmsq.png?ixlib=rb-1.1.0&rect=0%2C0%2C4000%2C1976&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Wes Mountain/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Tuesday’s national accounts show Australia ending 2021-22 on a strong note. </p>
<p>Gross domestic product grew by a historically robust 0.9% in the three months to June, and by an unusually-high <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">3.6%</a> over the year.</p>
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<p>Australia’s economy is now more than 5% bigger than it was before COVID, a better performance than most comparable economies.</p>
<p>The main drivers of the 0.9% jump in activity were household spending and exports.</p>
<p>Household spending grew 2.2% in the quarter, exports grew 5.5%. </p>
<p>Each contributed about one percentage point to the growth in GDP. Working the other way was a smaller build-up of inventories (unsold stock) that lowers the amount of production needed to meet the increased demand.</p>
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<p>Households have been saving less in order to spend more. Since the start of this year, household saving has slipped from 13.5% to a more normal 8.7%.</p>
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<p>Spending has also been supported by the fall of unemployment, now down to a near half-century low of <a href="https://www.abs.gov.au/media-centre/media-releases/unemployment-rate-falls-34">3.4%</a>, a low that might be sustained for <a href="https://theconversation.com/why-unemployment-is-set-to-stay-below-5-for-years-to-come-188705">quite a while</a>.</p>
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<p>In good news for government tax revenue, the <em>value</em> of Australia’s mineral exports also climbed due to higher commodity prices. </p>
<p>Price isn’t taken into account in compiling the most-widely quoted GDP measure, which is “real” GDP, a measure of volumes rather than prices. </p>
<p>Australia’s <a href="https://www.rba.gov.au/education/resources/explainers/australia-and-the-global-economy.html">terms of trade</a> (the ratio of export prices to import prices) reached an all-time high.</p>
<p>Investment spending by companies continued to remain <a href="https://www.abs.gov.au/statistics/economy/business-indicators/private-new-capital-expenditure-and-expected-expenditure-australia/jun-2022">flat</a>, after rebounding from COVID last year. </p>
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<p>As <a href="https://www.abc.net.au/news/2022-08-23/fact-check-sally-mcmanus-labour-s-share-of-gdp/101357044">highlighted</a> by ACTU secretary Sally McManus, the share of national income accruing to labour remains at a near 60-year low. </p>
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<p>In the June quarter profits again grew faster than wages. It remains to be seen whether initiatives from the <a href="https://treasury.gov.au/sites/default/files/inline-files/Jobs-and-Skills-Summit-Outcomes-Document.pdf">Jobs and Skills Summit</a> will do much to change this.</p>
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<p>Today’s good-looking news may not be a good guide to the future.</p>
<p>The three months to June were barely affected by the Reserve Bank’s five successive interest rate rises that began in May. </p>
<p>Monetary policy is famously said to have “<a href="https://www.jstor.org/stable/pdf/1828534.pdf">long and variable lags</a>”. </p>
<p>The Reserve Bank is almost certainly not done with interest rate increases. On Tuesday it said it expected to increase rates “<a href="https://www.rba.gov.au/media-releases/2022/mr-22-28.html">further over the months ahead</a>”. </p>
<p>But it also said it was “not on a pre-set path”.</p>
<h2>Economic management is about to get harder</h2>
<p>The Bank has to navigate between the <a href="https://www.britannica.com/topic/Scylla-and-Charybdis">Scylla</a> of the inflation it would get from not lifting interest rates enough and the <a href="https://mythology.net/greek/greek-creatures/charybdis/">Charybdis</a> of the recession it would get from lifting them too much. It is trying to find a Goldilocks path of “just right”.</p>
<p>As it happens, there’s a piece of news that should gladden its heart in the national accounts. Last year, it was giving the impression it wouldn’t lift rates until wage growth took off. This year in May it lost patience and lifted rates anyway, saying its business liaison program suggested companies were starting to pay more.</p>
<p>The national accounts show the compensation of employees (wages plus super) grew 7% over 2021-22, well above the official wage growth figure of <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">2.6%</a>.</p>
<p>Some of this is due to more people being in work. But not all. The bank might be starting to get what it wanted.</p><img src="https://counter.theconversation.com/content/189951/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins formerly worked as a senior economist in the Reserve Bank and Australian Treasury.</span></em></p>Australia’s economy grew unusually strongly in the year to June, when interest rate increases were yet to bite.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1858452022-06-27T19:50:26Z2022-06-27T19:50:26ZAustralians are more millennial, multilingual and less religious: what the census reveals<figure><img src="https://images.theconversation.com/files/471566/original/file-20220629-26-ef2c9l.png?ixlib=rb-1.1.0&rect=173%2C371%2C2796%2C1754&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Australian Bureau of Statistics</span></span></figcaption></figure><p>Census data to be <a href="https://abs.gov.au/census/find-census-data/quickstats/2021/AUS">released Tuesday</a> shows Australia changing rapidly before COVID, gaining an extra one million residents from overseas in the past five years, almost all of them in the three years before borders were closed.</p>
<p>For the first time since the question has been asked in the census, more than half of Australia’s residents (51.5%) report being either born overseas or having an overseas-born parent. </p>
<p>More than one quarter of the one million new arrivals have come from India or Nepal. </p>
<p>The census shows so-called millennials (born between 1981 and 1995) are on the cusp of displacing baby boomers as Australia’s dominant generation.</p>
<p>Although the number of baby boomers (born between 1946 and 1965) has changed little, as a proportion of the population boomers have fallen from 25.4% in 2011 to 21.5%. Millennials have climbed from 20.4% to level pegging at 21.5%.</p>
<p>The changes are reflected in the answer to the question about religion, the only non-compulsory question in the census. Almost 40% of the population identified as having no religion, up from 30% in 2016, and 22% in 2011.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-well-off-you-are-depends-on-who-you-are-comparing-the-lives-of-australias-millennials-gen-xers-and-baby-boomers-172064">How well off you are depends on who you are. Comparing the lives of Australia's Millennials, Gen-Xers and Baby Boomers</a>
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<p>Whereas 47% of millennials identify as having no religion, only 31% of boomers fail to identify with a faith. Nearly 60% of boomers are Christian, compared to 30% of millennials.</p>
<p>The share of the population identifying as Christian has slipped from 52% to 44%. Other religions are growing, but remain small by comparison. Hinduism climbed from 1.9% of the population in 2016 to 2.7%. Islam climbed from 2.6% to 3.2%.</p>
<h2>The five-yearly snapshot</h2>
<p>Conducted every five years since 1961, and before that less often from 1911, and asking questions of every Australian household, the census provides information about the ways society is changing that couldn’t be obtained in any other way.</p>
<p>In the past five years the number of people who use a language other than English at home has climbed 792,000 to more than 5.6 million. 852,000 Australian residents identify as not speaking English well or at all.</p>
<p>Mandarin remains the most common language other than English used at home, used by 685,300 people, followed by Arabic with 367,200 people.</p>
<h2>The real value is in the detail</h2>
<p>The real value of the census is in the locational details. The information released on Tuesday will identify locations with any characteristic that needs particular services, such as the areas with more people who identify as not speaking English well or at all. It will also show which parts of Australia are growing in population and which parts are shrinking.</p>
<p>The broad-brush information released on Monday showed the number of single-parent families had climbed past one million. The information released on Tuesday will identify the suburbs and towns in which they live.</p>
<p>The information released on Monday showed the overall proportion of Australians owning their homes was little changed. The information released on Tuesday will report those proportions by age group and city.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/471034/original/file-20220627-19-e1n1h9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The thank you message for the 2021 census.</span>
<span class="attribution"><span class="source">ABS</span></span>
</figcaption>
</figure>
<h2>New questions</h2>
<p>Two new separate questions in the 2021 census ask about service in defence forces and long-term health conditions. </p>
<p>One quarter of veterans are aged 65-74, reflecting conscription during the Vietnam War. </p>
<p>More than two million Australians suffer long-term mental health conditions; more than two million suffer arthritis; and more than two million suffer asthma.</p>
<p>Tuesday’s figures will offer more detail on the locations of sufferers and details such as their income and occupations, as well as details such as whether those who’ve served in defence were conscripts, serving in Vietnam.</p>
<h2>Saved from the axe</h2>
<p>Seven years ago the Australian Bureau of Statistics tried to <a href="https://www.smh.com.au/politics/federal/abs-is-behind-controversial-proposal-to-axe-the-2016-census-not-the-abbott-government-20150219-13j4az.html">axe</a> the five-yearly census, making it 10-yearly – as in the United Kingdom and the United States – to save money.</p>
<p>The outcry from planners and researchers who relied on the census resulted in the bureau being given an extra <a href="https://www.smh.com.au/national/federal-budget-2015-census-saved-250m-investment-in-bureau-of-statistics-20150506-ggvdrp.html">A$250 million</a> to ensure it continued.</p>
<p>Tuesday’s is the first of three census data releases. In October, the bureau will release information about education and employment and travel to work. </p>
<p>Early next year it will release location-specific socio-economic information and estimates of homelessness.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-religion-is-australias-second-largest-religious-group-and-its-having-a-profound-effect-on-our-laws-185697">'No religion' is Australia's second-largest religious group – and it's having a profound effect on our laws</a>
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<img src="https://counter.theconversation.com/content/185845/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>India is now the third-largest birthplace of Australian residents behind Australia and England, while for the first time less than half of the population has identified as Christian.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1852952022-06-26T19:58:08Z2022-06-26T19:58:08ZShould the census ask about race? It’s not a simple question and may reinforce ‘racial’ thinking<p>Unlike census questionnaires in the US, New Zealand and Canada, the Australian Census doesn’t include questions about “race” or “ethnicity” and asks instead about “ancestry”.</p>
<p>That may be about to change, with new Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs Andrew Giles <a href="https://www.abc.net.au/news/2022-06-16/federal-government-to-measure-ethnicity-data-multiculturalism/101158038">saying</a> he wants a new approach to “ethnicity” data in the next census in 2026.</p>
<p>Without this data, Giles <a href="https://www.abc.net.au/news/2022-06-16/federal-government-to-measure-ethnicity-data-multiculturalism/101158038">said</a>, Australia faces a “fundamental barrier to understanding the issues that face multicultural Australians.”</p>
<p>But is it ethical to classify the population by what is effectively race?</p>
<p>A large body of research on Malaysia, for example – including by anthropologist <a href="https://uhpress.hawaii.edu/title/other-malays-nationalism-and-cosmopolitanism-in-the-modern-malay-world/">Joel Kahn</a> and historian <a href="https://nuspress.nus.edu.sg/products/taming-the-wild">Sandra Manickam</a> – shows systems aimed at classifying populations this way do not reflect naturally existing categories, but rather, create them. </p>
<p>Over time, these categories harden, so such systems function as “race-making instruments,” as political scientist <a href="https://www.amazon.com/Schematic-State-Transnationalism-Politics-Census/dp/1107578787">Debra Thompson</a> has put it.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1537318969551384576"}"></div></p>
<h2>How does Australia currently handle this issue?</h2>
<p>The Australian Bureau of Statistics (ABS), which runs the Australian Census, classifies answers on “ancestry” using a tool called the Australian Standard Classification of Cultural and Ethnic Groups. It’s essentially a spreadsheet of categories into which ancestry answers are aggregated. </p>
<p>This spreadsheet consists of 278 “cultural and ethnic groups”, like “Malay”. There are also 28 “narrow groups,” like “Maritime Southeast Asian” and nine “broad groups,” like “Southeast Asian.”</p>
<p>Used in conjunction with the person’s birthplace, language spoken at home, religion, and parents’ birthplace, the ABS uses this special spreadsheet to make its best guess about Australians’ ethnicity.</p>
<p>There’s some room for nuance. It includes two self-identified and unranked answers, allowing people to show that although they were born in Malaysia, for example, they might be a member of a minority group that is, say, “Southern Asian,” or “Chinese Asian,” as the spreadsheet terms them. </p>
<p>It also allows people to identify as members of groups spread across national borders, like Kurds or Bengalis. </p>
<p>Because the answers aren’t ranked or weighted, the question doesn’t squeeze respondents into a single box. It prompts them to decide which two sources of identity are most salient to them, instead of including every single “diverse” ancestor they can possibly think of. </p>
<p>In other words, as the process described above shows, Australians are already categorised by ethnicity and race by the state, albeit without direct public acknowledgement.</p>
<h2>So what’s the problem?</h2>
<p>So, what problem is this change trying to solve? Several, it seems.</p>
<p>One is that important national data sets, including for example, the National Notifiable Diseases database, don’t ask people their ethnicity or race.</p>
<p>Nor does this database employ other proxy indicators such as language/s spoken at home or elsewhere, or country of birth. </p>
<p>As sociologist <a href="https://andrewjakubowicz.com/2020/06/22/dark-data-hole-leaves-multicultural-australia-in-danger-in-second-wave-pandemic/">Andrew Jakubowicz</a> has argued, this omission leaves researchers unable to confirm their impression that recent migrants from South and Southeast Asia, and the Middle East, have been more susceptible to contracting COVID at work than other Australians.</p>
<p>So why not roll out the ABS’ existing methodology, which it already updates from time to time, across all government agencies and beyond? </p>
<p>Perhaps it is because Australians are less “legible” to the state and multicultural advocates than we used to be.</p>
<h2>Times have changed</h2>
<p>Australia’s multicultural system was created in the 1970s and 80s. Implicit within it was the assumption migrant minority groups would be few, discrete and distinct. Each would have a clear set of “representative” or advocacy associations and leaders for government to consult with. </p>
<p>Yet the volume and composition of migration flows has increased and diversified. The number of identity groups – ethnic, religious, cultural – has proliferated. </p>
<p>Layers of nested identities, and overlaps and intersections between categories, have also multiplied. Hybrid identities are common.</p>
<p>Australians are increasingly interacting and negotiating cultural differences without official intervention, assistance, or representation.</p>
<p>If a new generation of multicultural leaders can’t figure out how many of us are not white – because we might have been born in Australia or speak English at home, but our grandparents are Asian, for example – then how do they make claims on our behalf? How do they create constituencies out of us and compete for our loyalties?</p>
<p>If we have not arrived recently and do not require “settlement services” or visa assistance, are there other services or forms of advocacy we might need? </p>
<p>Are there new identity groups that could be built? For example “Asian Australian” – a loose category now under construction that might eventually hold Australia’s second and third generation East Asian “looking” migrants? </p>
<p>(Australians have trouble understanding South Asians as “Asians”).</p>
<p>Redesigning our approach to ethnicity data collection, however, will open up critical and complicated questions like:</p>
<ul>
<li>what is an ethnic group? </li>
<li>what is a culture? </li>
<li>what “races” should we group them into? </li>
<li>where are the boundaries between these concepts, and what identity labels belong in each of them? </li>
<li>where are the boundaries between one identity label and another? Should religious or political minorities like “Sikhs” or “Hong Kongers” be able to claim “ethnicity” status, or simply religious or no status at all? </li>
<li>should “Ahmadis” be grouped with “Muslims?” </li>
<li>which groups are European? Which are Asian? Which are white?</li>
<li>what benefits or disadvantages will flow from the answers to these questions? Who will adjudicate?</li>
</ul>
<p>Such questions have no fixed or universal answers because all the categories involved are fluid, dynamic, contested, and fundamentally political.</p>
<p>These are not questions of data science or demography, but of politics, ethics and context.</p>
<p>Universal schemes aimed at classifying populations by “race” or “ethnicity” can reinforce racial thinking and perpetuate racialising practices.</p>
<p>They can force us into a game of competing for better positions within a racial hierarchy, rather than creating broader solidarities that go beyond race. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/while-rich-countries-experience-a-post-covid-boom-the-poor-are-getting-poorer-heres-how-australia-can-help-160604">While rich countries experience a post-COVID boom, the poor are getting poorer. Here's how Australia can help</a>
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</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/185295/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amrita Malhi has received an Innovation Connections grant from the Department of Industry, Science, Energy, and Resources to test the assumptions embedded within a tool designed for collecting data on ethnic and cultural diversity.</span></em></p>Universal schemes aimed at classifying populations by ‘race’ or ‘ethnicity’ can force us into a game of competing for better positions within a racial hierarchy.Amrita Malhi, Visiting Fellow, Coral Bell School of Asia Pacific Affairs, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1835452022-06-15T20:01:00Z2022-06-15T20:01:00ZHow we invented ‘unemployment’ – and why we’re outgrowing it<figure><img src="https://images.theconversation.com/files/468921/original/file-20220615-26-zrdu9m.png?ixlib=rb-1.1.0&rect=574%2C497%2C2239%2C1173&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>When Labor leader Anthony Albanese couldn’t quote Australia’s unemployment rate in the first week of the election campaign, many said it didn’t matter: the Australian Bureau of Statistics figure was “<a href="https://www.theage.com.au/national/victoria/employing-the-numbers-when-the-official-rate-is-rendered-meaningless-20220412-p5acyv.html">meaningless</a>”; “<a href="https://nitter.net/headshaker2/status/1513344714640003073#m">fudged</a>”; “<a href="https://headtopics.com/au/i-m-not-sure-what-it-is-albanese-stumbles-on-unemployment-rate-and-cash-rate-25505788">manipulated</a>”; and didn’t count <a href="https://twitter.com/antipovertycent/status/1483973901252456454">all those who had registered for JobSeeker</a>.</p>
<p>The truth is the official measure of unemployment does what it says on the box. It counts those without any work who are available to work and looking for work.</p>
<p>The result of an astonishingly large survey of <a href="https://theconversation.com/forget-the-election-gaffes-australias-unemployment-rate-is-good-news-and-set-to-get-even-better-by-polling-day-181141">26,000 households</a> covering 50,000 people each month, there’s little reason to question its accuracy.</p>
<p>But there are good reasons to question why the bureau does it in the way it does.</p>
<p>“Unemployment” as we have come to understand it is a fairly new concept. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/468353/original/file-20220612-27912-p4esbx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Until the 1900s much work was intermittent.</span>
<span class="attribution"><span class="source">Rachel Claire/Pexels</span></span>
</figcaption>
</figure>
<p>As I outline in my book, <a href="https://www.bloomsbury.com/uk/inventing-unemployment-9781509952717/">Inventing Unemployment</a>, before the second world war censuses tended to divide the population differently – into breadwinners and dependants. </p>
<p>A breadwinner who wasn’t employed would be recorded as a breadwinner rather than unemployed (with their usual occupation noted). </p>
<p>That’s probably because until the 20th century, irregular work was the norm. </p>
<p>Late-19th-century Sydney had no extensive manufacturing. Work such as wool washing, tanning, meat preserving and loading sea cargo was seasonal and tied to <a href="https://www.jstor.org/stable/10.5263/labourhistory.108.0071">rural rhythms</a>. </p>
<p>Even in more stable occupations, many workers were little more than or sub-contractors or day labourers, their work intermittent.</p>
<h2>Unemployment as we know it</h2>
<p>The 1947 census introduced three distinct categories: employed, “unemployed” and “not in the labour force”. To be “unemployed” you had to describe yourself as willing and able to work, but without work.</p>
<p>Carried into the quarterly labour force surveys which started in the 1960s and continue monthly to this day, the change enabled the creation of an <a href="https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-types.html">unemployment rate</a>, which is the number of unemployed divided by the total of the number of employed and unemployed, which is called the “labour force”.</p>
<p>The categorisation made more sense by then as work was becoming full-time and ongoing. Being “unemployed” (workless but in the workforce) had come to be seen as unusual and worthy of government support. The Curtin Labor government introduced <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2019/August/Creating-unemployment-benefits">unemployment benefits</a> in 1945. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/memories-in-1961-labor-promised-to-boost-the-deficit-to-fight-unemployment-the-promise-won-115376">Memories. In 1961 Labor promised to boost the deficit to fight unemployment. The promise won</a>
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<p>The changes were in line with International Labour Organisation recommendations which themselves followed changes in the United States which in 1937 had asked all non-workers who’d expressed a desire to work whether they were able to work and were actively seeking work. </p>
<p>The context was United States President Franklin D Roosevelt’s determination to fight unemployment through job creation schemes. The advantage of the new measures was that they gave a measure of immediate unmet demand for work. </p>
<p>Excluding both those who were unwilling to work at present and those who had any work at all yielded a measure of the minimum number of jobs needed. Policy drove the definition rather than the other way around.</p>
<h2>Messy by design</h2>
<p>But the definitions were messy. Labour markets confound easy distinctions between working and not working, and there’s no particular degree of desire for work that clearly distinguishes the “unemployed” from “not in the labour force”. </p>
<p>Looking back, what was exceptional about the post-war decades is that most of the time the new definitions were easy to apply. If you were in work, the chances were you were in full-time work; if you weren’t in full-time work the chances were you weren’t working at all, and that you were either wanting work or none.</p>
<p>And the idea of the “labour force” summed up fairly stable social categories: men who entered at 15 years and were expected to work or look for work for 50 years, and women who also entered in their mid-teens only to permanently withdraw upon marriage or childbirth.</p>
<p>Not now. As social researcher <a href="https://www.radstats.org.uk/no088/Threlfall88.pdf">Monica Threlfall</a> points out, whereas once the labour force was an identifiable category,</p>
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<p>today it is more like an unbounded space that a variety of people of different ages enter, leave and re-enter at a variety of rates.</p>
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<p>When the headline monthly unemployment rate changes, what has moved is often not the numerator – the number of unemployed – but the shape-shifting denominator, which depends on whether people define themselves as looking and available for paid work at the particular time they are asked.</p>
<p>And the main questions don’t pick up underemployment. Australia has one of the largest part-time work forces in the OECD, which is why the Bureau of Statistics also asks workers whether they would like more hours, and reports the answers alongside the unemployment rate.</p>
<p>It also measures “discouraged workers”, people who are available for and wanting work but have given up the search and so aren’t counted as “unemployed”.</p>
<p>The only way to really understand whether we are succeeding or failing in providing paid work is to take all three measures together – unemployment, underemployment and the count of discouraged workers.</p>
<h2>Messier by the month</h2>
<p>What this total tells us will be quite different to the count of the number of Australians on unemployment benefits. </p>
<p>After tracking each other closely, the number of “unemployed” and the number on unemployment benefits has diverged over the past 25 years and that divergence became even more pronounced during COVID.</p>
<p>Australian experts <a href="https://theconversation.com/how-can-more-people-be-on-unemployment-benefits-than-before-covid-with-fewer-unemployed-australians-heres-how-181733">Peter Whiteford and Bruce Bradbury</a> point out most unemployed people aren’t on benefits, and increasingly unemployment benefits are available to people who are not unemployed.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/how-can-more-people-be-on-unemployment-benefits-than-before-covid-with-fewer-unemployed-australians-heres-how-181733">How can more people be on unemployment benefits than before COVID, with fewer unemployed Australians? Here's how</a>
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<p>These days unemployment benefits are available to people not seeking paid work but engaged in voluntary work, study, or providing home schooling.</p>
<p>And people who once would not have been considered unemployed – such as single parents and people with disabilities – are now put on unemployment benefits and required to search for work in order to get them.</p>
<p>After holding together for decades, the post-war administrative and legal construction of unemployment is failing us. We’re outgrowing it.</p><img src="https://counter.theconversation.com/content/183545/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony O'Donnell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The concept of unemployment and an unemployment rate is fairly new, dating back to the end of the second world war. It’s increasingly unfit for purpose.Anthony O'Donnell, Adjunct Senior Lecturer, School of Law, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1839162022-06-01T09:18:34Z2022-06-01T09:18:34ZNational income is climbing, but the share going to wages is shrinking<figure><img src="https://images.theconversation.com/files/466560/original/file-20220601-48861-924wcu.png?ixlib=rb-1.1.0&rect=238%2C179%2C3363%2C1529&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australia’s economy edged closer back towards normal in the three months to March, growing by 0.8% in the quarter (which is towards the upper end of economic growth before COVID hit in early 2020) and <a href="https://www.abs.gov.au/media-centre/media-releases/economic-activity-increased-08-march-quarter">3.3%</a> over the year to the March (which is somewhat higher than before the pandemic).</p>
<p>The economy is now 4.5% bigger than before the COVID pandemic started. This is a stronger recovery than experienced in the United States, the European Union, the United Kingdom, South Korea and Canada. </p>
<p>Japan’s economy remains smaller than it was before COVID. </p>
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<p>Consumer spending grew an impressive 1.5% in the March quarter, and 4% over the year, spurred by a further easing of restrictions and a renewed desire to travel. </p>
<p>Spending on travel services surged 60%. Car sales jumped 13%.</p>
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<p>Helping fund the increased spending was a further dip in the household saving ratio, slipping from 13.4% to 11.4% of income.</p>
<p>As seen on the graph, it is still much higher than it was in the four decades before COVID, giving it room to fall further if consumers remain confident.</p>
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<p>The drop in unemployment to a <a href="https://theconversation.com/at-3-9-australias-unemployment-rate-now-officially-begins-with-3-whats-next-183226">half-century low of 3.9%</a> has lifted consumer confidence and spending, although the jump in inflation to <a href="https://theconversation.com/inflation-hits-5-1-how-long-until-mortgage-rates-climb-181832">5.1%</a> and the first of several <a href="https://theconversation.com/rba-governor-philip-lowe-is-hiking-interest-rates-worst-case-itll-mean-an-extra-600-per-month-on-a-500-000-mortgage-182241">interest rate hikes</a> have damped confidence more recently.</p>
<p>Government spending, notably on health care, contributed to economic growth.</p>
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<em>
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Read more:
<a href="https://theconversation.com/inflation-hits-5-1-how-long-until-mortgage-rates-climb-181832">Inflation hits 5.1%. How long until mortgage rates climb?</a>
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<p>The Bureau of Statistics <a href="https://www.abs.gov.au/media-centre/media-releases/import-demand-narrows-current-account-surplus">noted</a> a surge in imported rapid antigen tests.</p>
<p>Construction was weak, both for business and housing, partly reflecting shortages of skilled labour. </p>
<h2>Sharing the cake</h2>
<p>The closest measure of total average well-being we can get from the national accounts is real net national disposable income per capita. </p>
<p>While this climbed 1% in the March quarter, it doesn’t necessarily mean the typical Australian household is better off.</p>
<p>What matters is how the cake is divided between wages and profits.</p>
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<p>The Russian attack on Ukraine drove up commodity prices, driving the ratio of export prices to import prices to a record high.</p>
<p>This lifted the profits of Australian mining companies <a href="https://www.abs.gov.au/statistics/economy/business-indicators/business-indicators-australia/mar-2022">25%</a>. </p>
<p>The share of national income going to profits climbed to an all-time high of 31.1%.</p>
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<p>As a result, even though <a href="https://theconversation.com/at-3-9-australias-unemployment-rate-now-officially-begins-with-3-183226">more of the population was in work than ever before</a>, the share of national income going to wages sunk to a near all-time low of 49.8%.</p>
<p>Before COVID the wages share was 53%. At the start of the 2000s it was 56%.</p>
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<p>Working out the reasons for the downward trend in the share of national income going to wages, and how to get it higher, will be an important priority for the new government.</p>
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Read more:
<a href="https://theconversation.com/at-3-9-australias-unemployment-rate-now-officially-begins-with-3-183226">At 3.9%, Australia's unemployment rate now officially begins with '3'</a>
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<img src="https://counter.theconversation.com/content/183916/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins has been an economic analyst and forecaster in the Reserve Bank of Australia and the Australian Treasury.</span></em></p>New figures show economic growth edged closer back towards normal in the months to March, but the gains went to profits rather than wages.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1832262022-05-19T07:56:24Z2022-05-19T07:56:24ZAt 3.9%, Australia’s unemployment rate now officially begins with ‘3’<figure><img src="https://images.theconversation.com/files/464168/original/file-20220519-12-7to7r9.png?ixlib=rb-1.1.0&rect=1166%2C237%2C1006%2C618&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Early in the election campaign, on April 14, we learned that Australia’s unemployment rate had slipped below 4% in March, to <a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">3.95%</a> – the lowest rate in 48 years.</p>
<p>But the Coalition was denied the bragging rights that would flow from an unemployment rate beginning with “3” because of a Bureau of Statistics convention of quoting the rate to only one decimal place, which meant the rate was presented as “4.0%”, the same as the month before (when it was actually 4.04%).</p>
<p>Thursday’s figure, for the month of April, has broken the barrier. Officially 3.9% (and actually <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release">3.85%</a>), it is clearly below 4% for the second consecutive month (because the March figure has been revised downwards to also round to 3.9%).</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">Technically unemployment now begins with a '3'. How to keep it there?</a>
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<p>It means the unemployment rate has decisively broken out of the band of 5-6% it has been in or near for the past two decades and slipped below 4%.</p>
<p>It has fallen to where it was a half-century ago when (in the days the survey was quarterly) it jumped from 3.7% to 5.4% between November 1974 and February 1975.</p>
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<p>Of course, 3.9% is an average. Over the country, the unemployment rate ranges from lows of 2.9% in Western Australia and 3.1% in the Australian Capital Territory, to highs of 4.5% in Queensland and South Australia.</p>
<p>For women, the rate is an almost half-century low of 3.7%, less than the 14-year low of 4.0% for men.</p>
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<p>Australia <a href="https://data.oecd.org/unemp/unemployment-rate.htm">isn’t alone</a>. The unemployment rate is below 4% in the United States, the United Kingdom and New Zealand; and below 3% in Japan, Germany and Korea.</p>
<p>Further declines are expected. The Reserve Bank is forecasting unemployment of <a href="https://www.rba.gov.au/publications/smp/2022/may/pdf/forecast-table-2022-05.pdf">3.6% by 2023</a>, a few points less than the Treasury, which is forecasting <a href="https://budget.gov.au/2022-23/content/bp1/download/bp1_bs-1.pdf">3.75%</a>.</p>
<p>But the Bank is modest about its forecasting ability. It only claims to be 90% confident that by mid-2024 the rate will be somewhere between 2% and 5%.</p>
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<a href="https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=507&fit=crop&dpr=1 600w, https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=507&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=507&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=637&fit=crop&dpr=1 754w, https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=637&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/464169/original/file-20220519-21-lepcwo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=637&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>At a press conference to release Labor’s <a href="https://cdn.theconversation.com/static_files/files/2108/ALP_Election_Costing_2022_FINAL_-_Copy.pdf">election policy costings</a> hours after the employment numbers were released, Labor treasury spokesman Jim Chalmers held out the prospect of more optimistic forecasts in Labor’s first budget as a result of the net $7.4 billion of extra spending it is proposing.</p>
<p>He said he would work with the Treasury if elected to ensure the dividends of Labor’s investments in childcare, training and energy were reflected in those forecasts.</p>
<h2>The improvement is real</h2>
<p>Sometimes the unemployment rate can be misleading. It can fall because people have left their jobs and are too despondent to search for new ones, meaning they are classified as “<a href="https://theconversation.com/forget-the-election-gaffes-australias-unemployment-rate-is-good-news-and-set-to-get-even-better-by-polling-day-181141">not in the labour force</a>” rather than unemployed.</p>
<p>And it can fall even though people are less fully employed, working fewer hours than they did (in accordance with an international convention, <a href="https://twitter.com/Bjorn_Jarvis/status/1513991565760376834">one hour per week</a> is all that’s needed to be “employed”).</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-the-election-gaffes-australias-unemployment-rate-is-good-news-and-set-to-get-even-better-by-polling-day-181141">Forget the election gaffes: Australia's unemployment rate is good news – and set to get even better by polling day</a>
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<p>But in these figures the share of the working age population in work remains at an all-time high of <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/mar-2022#">63.8%</a>, well above the 62.4% before the COVID crisis and the hundreds of billions of dollars spent in response from March 2020.</p>
<p>The number of hours worked rose in April to a record 1,833 million hours.</p>
<p>Underemployment – the proportion of people working fewer hours than they would like – fell to a fresh 14-year low of 6.1%.</p>
<h2>Wages missing out</h2>
<p>Australia’s steadily falling unemployment rates have to date had little effect on wages growth. The figures released on Wednesday showed wages grew <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/mar-2022">2.4%</a> in the year to March, up only marginally on the 2.3% in the year to December.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/are-real-wages-falling-heres-the-evidence-182171">Are real wages falling? Here's the evidence</a>
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<p>The Reserve Bank says its <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2022/2022-05-03.html">business liaison programme</a> is giving it a more positive picture, with firms telling it they are having to pay to attract and retain staff.</p>
<p>The Bank is forecasting annual wages growth of <a href="https://www.rba.gov.au/publications/smp/2022/may/pdf/forecast-table-2022-05.pdf">3%</a> by December and 3.5% by December 2023, but it concedes its wage growth forecasts have been overoptimistic in the past, producing higher numbers than eventuated in most of the <a href="https://www.rba.gov.au/speeches/2021/sp-gov-2021-07-08.html">past ten years</a>.</p>
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<span class="attribution"><a class="source" href="https://www.rba.gov.au/speeches/2021/sp-gov-2021-07-08.html">Reserve Bank of Australia</a></span>
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<p>The Bank remains hopeful. Previous dips in unemployment, in 2008 and 2010, boosted wages growth. </p>
<p>A recent study by two of its economists finds that in the locations where unemployment fell <a href="https://www.rba.gov.au/publications/rdp/2021/2021-09/full.html">below 4%</a> in the decade before COVID, wages grew the most.</p>
<h2>Higher rates in store</h2>
<p>The most immediate impact of Thursday’s very welcome news on unemployment will be confirmation within Reserve Bank HQ that the economy can withstand further increases in interest rates. </p>
<p>The next increase is likely a fortnight after the next government takes office, following the Bank’s June board meeting on Tuesday June 7.</p>
<p>Only if it gets clear evidence that wages aren’t climbing as it expects is it likely to consider changing course.</p><img src="https://counter.theconversation.com/content/183226/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins was formerly a senior economist in the Reserve Bank of Australia and the Australian Treasury.</span></em></p>The share of the population in work has hit an all-time high as the share of the workforce underemployed has hit a 14-year low. The fresh low in unemployment will bring higher interest rates, and perhaps higher wages.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society and NATSEM, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1822732022-05-03T06:32:58Z2022-05-03T06:32:58ZWhy the RBA should go easy on interest rate hikes: inflation may already be retreating and going too hard risks a recession<figure><img src="https://images.theconversation.com/files/460933/original/file-20220503-19311-d0xv7q.png?ixlib=rb-1.1.0&rect=1611%2C397%2C1957%2C1248&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Reserve Bank Governor Philip Lowe</span> <span class="attribution"><span class="source">Lukas Coch/AAP</span></span></figcaption></figure><p>One of the stranger things about the Reserve Bank’s <a href="https://www.rba.gov.au/media-releases/2022/mr-22-12.html">announcement</a> of why it’s lifting interest rates by 0.25 percentage points is that it suggests inflation will come down by itself.</p>
<p>“A further rise in inflation is expected in the near term,” the RBA says, “but as supply-side disruptions are resolved, inflation is expected to decline back towards the target range of 2-3%.</p>
<p>So why raise rates now, for the first time in more than a decade? The bank says it is about "withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic”, which is fair enough.</p>
<p>But our latest burst of inflation is weird, and resistant to rate hikes. If the Reserve Bank isn’t careful, too many more rate hikes like this might help bring on a recession.</p>
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<p>Labor’s Anthony Albanese is as good as correct when he says “<a href="https://twitter.com/AlboMP/status/1506887331025866753">everything is going up except your wages</a>” – not completely correct, because wages are going up, by a minuscule 2.3% per year on the official figures; but essentially correct, because when it comes to prices, almost every single one is going up.</p>
<p>Every three months the Bureau of Statistics prices around <a href="https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html">100,000</a> goods and services. They account for almost everything we buy, the exceptions including illegal drugs and prostitution, where pricing would be “<a href="https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162">difficult and dangerous</a>”.</p>
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Read more:
<a href="https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162">What's in the CPI and what does it actually measure?</a>
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<p>Among the types of bread the bureau prices are rye, sliced white, and multigrain, from all sorts of stores in every capital city. Where the bureau doesn’t price a type of loaf, it is a fair bet its price moves in line with the loaves it does price.</p>
<p>Then it groups these 100,000 or so prices into “expenditure classes”, 87 of them. “Bread” is one, “breakfast cereals” is another. Furniture and rent are two others.</p>
<p>Rarely do the expenditure classes move as one. Typically, only 50 or so of the 87 climb in price. But in the March quarter just finished, an astounding <a href="https://images.theconversation.com/files/460778/original/file-20220502-12-60x3lx.GIF">70</a> climbed in price; according to Deutsche Bank economist Phil O'Donaghoe, that’s the most ever in the 72-year history of the consumer price index.</p>
<p>And the prices that climbed most – by far – were the ones we had little choice but to pay. </p>
<h2>Necessities up, treats not as much</h2>
<p>The bureau divides the 87 classes of goods into “<a href="https://www.abs.gov.au/articles/measuring-non-discretionary-and-discretionary-inflation">non-discretionary</a>” and “discretionary”.</p>
<p>It classifies bread as non-discretionary, biscuits as discretionary; petrol as non-discretionary, new cars as discretionary, and so on.</p>
<p>In the year to March, non-discretionary inflation (the price rises we can’t avoid) was a gargantuan <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#data-download">6.6%</a> – well above the official inflation rate of 5.1%, and the highest in records going back to 2006.</p>
<p>Discretionary inflation – the price rises on the treats we splurge on if we’ve got the money – was only <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#data-download">2.7%</a>. </p>
<p>Not since 2011 has the gap been that wide, which makes this inflation unusual.</p>
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<p>While price rises are extraordinarily widespread – because most things need diesel to move them, and we were hit with floods, COVID-linked supply problems and the invasion of Ukraine all at once – they don’t seem to be the result of splurging.</p>
<p>These price rises are more like a tax.</p>
<p>The usual response to the usual hike in inflation is to hike interest rates. It’s a way to take away access to cash and push up mortgage and other payments so people have <a href="https://www.smh.com.au/business/the-economy/the-interest-rate-rise-we-had-to-have-and-how-it-will-help-20220502-p5ahp6.html">less money to spend</a> and push up prices.</p>
<p>But this hike in inflation is doing that by itself, as the government recognised in the budget by handing out <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/parliament-passes-legislation-lower-costs-and-support">$250 cash payments</a> to compensate.</p>
<h2>These price rises are like a tax</h2>
<p>If the big price rises are beyond our control and making us poorer, hiking interest rates to make us poorer still, in the hope we will splurge less on things whose prices we can influence (and whose price rises are small) might not achieve much.</p>
<p>Done repeatedly, the Reserve Bank could push up interest rates because inflation is high, discover inflation is still high, push interest rates higher in response, notice inflation is still high, push interest rates even higher in response… and so on, until it had brought on a recession.</p>
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Read more:
<a href="https://theconversation.com/the-rbas-rate-hikes-will-add-hundreds-to-monthly-mortgage-payments-182241">The RBA's rate hikes will add hundreds to monthly mortgage payments</a>
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<p>A recession is already a risk with these sorts of price rises. If big enough, they can force consumers to cut other spending to the point where the economy stagnates and creates unemployment in the face of inflation – so-called “<a href="https://www.smh.com.au/business/the-economy/what-s-stagflation-and-what-would-it-mean-for-you-20220315-p5a4q9.html">stagflation</a>”.</p>
<p>Another response would have been to wait. Seriously. The floods, invasion and supply problems pushing up prices in recent months are likely to pass, pushing down inflation and pushing down a lot of prices. </p>
<h2>Inflation might have already fallen</h2>
<p>It might have already happened. The oil price has fallen 11% from its peak, down 2.5% in the past two weeks alone. And inflation has fallen – on one measure, to zero.</p>
<p>The official Bureau of Statistics measure of inflation is produced every three months, but for 13 years now the Melbourne Institute of Applied Economic and Social Research has produced its own simpler <a href="https://melbourneinstitute.unimelb.edu.au/publications/macroeconomic-reports">monthly measure</a>, which tracks the official rate pretty well.</p>
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Read more:
<a href="https://theconversation.com/inflation-hits-5-1-how-long-until-mortgage-rates-climb-181832">Inflation hits 5.1%. How long until mortgage rates climb?</a>
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<p>Although missing a lot (tracking fewer types of bread, and a national rather than a city-by-city measure) it is produced quickly and more often, providing a better insight into prices in real time.</p>
<p>The latest, released on Monday, points to an inflation rate of <a href="https://cdn.theconversation.com/static_files/files/2088/MI_Inflation_Gauge_April_2022.pdf">zero</a> in April. </p>
<p>That’s right. While some prices continued to rise as always, enough prices fell to offset that. The high inflation in the lead-up to March stopped or paused in April.</p>
<h2>Rate hikes need only be mild</h2>
<p>It’s different in the United States. There, inflation is supercharged by wage growth averaging <a href="https://tradingeconomics.com/united-states/wage-growth">9%</a> and the Federal Reserve is about to lift interest rates <a href="https://www.investopedia.com/markets-expect-50-basis-point-fed-rate-hike-in-may-2022-5270503">aggressively</a>.</p>
<p>Here, wage growth in the year to December was just <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">2.3%</a>. We’ll get the figures for the year to March in a fortnight. There’s a good case for future rate hikes to be a good deal less aggressive.</p><img src="https://counter.theconversation.com/content/182273/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why raise rates now, for the first time in more than a decade? If the Reserve Bank isn’t careful, too many more rate hikes like this might help bring on a recession.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1818322022-04-27T06:35:41Z2022-04-27T06:35:41ZInflation hits 5.1%. How long until mortgage rates climb?<figure><img src="https://images.theconversation.com/files/459964/original/file-20220427-19-ncf90b.png?ixlib=rb-1.1.0&rect=760%2C431%2C1940%2C1048&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock/ABS</span></span></figcaption></figure><p>Australian consumer prices jumped an extraordinary 2.1% in the first three months of the year, the biggest quarterly jump since the introduction of the 10% goods and services tax at the start of the century.</p>
<p>The outsized increase, together with a larger than normal increase in the months to December, pushed Australia’s annual inflation rate way above the Reserve Bank’s 2-3% target to <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">5.1%</a> – the biggest annual inflation rate for two decades. </p>
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<p>Petrol prices rose to a record high. The Bureau of Statistics says averaged unleaded petrol averaged A$1.83 per litre in the March quarter. </p>
<p>The annual increase, 35.1%, was the biggest since Iraq’s invasion of Kuwait in 1990.</p>
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<p>New dwelling prices rose due to shortages of labour and materials, and fewer government grants. Fresh food prices have increased due to floods. </p>
<p>Home prices, sometimes erroneously thought to be excluded from the consumer price index, surged 13.7% over the year, the most since the start of the GST.</p>
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Read more:
<a href="https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162">What's in the CPI and what does it actually measure?</a>
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<p>The increase tracks the cost of buying a new dwelling by an owner occupier, and reflects what the Bureau describes as high levels of building activity combined with ongoing shortages of materials and labour.</p>
<p>While the cost of housing is included in the consumer price index, the cost of land is not, being treated as an investment rather than a consumer good.</p>
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<p>To get a better idea of what would be happening were it not for these unusual and outsized moves, the Bureau of Statistics calculates what it calls a “<a href="https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html">trimmed mean</a>” measure of underlying inflation.</p>
<p>The trimmed mean excludes the 15% of prices that climbed the most in the quarter and the 15% of prices that climbed the least or fell.</p>
<p>This underlying measure, closely watched by the Reserve Bank, climbed 3.7% – the first time it has climbed beyond the bank’s 2-3% target range since 2010. </p>
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<p>Many people don’t believe the official inflation figures. They say they are too low (although interestingly this time, the <a href="https://www.forexfactory.com/news/1150662-australia-inflation-expectations-melbourne-institutes-april-survey-52">5.2%</a> estimate in the Melbourne Institute’s April consumer survey matched reality). </p>
<p>In part this is because people tend to notice the prices that have jumped. Petrol prices are particularly visible. People tend not to notice the many other prices, including rents in some parts of Australia, that have been falling.</p>
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Read more:
<a href="https://theconversation.com/as-petrol-prices-rise-will-carbon-emissions-come-down-178024">As petrol prices rise, will carbon emissions come down?</a>
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<p>And in part it is because movements in the consumer price index are an average.</p>
<p>The price of the bundle of goods and services used by around half the households would have gone up by more than 5.1%, and the price of the bundle used by the other half by less than 5.1%. The households facing the increases notice it more. </p>
<p>Over the past ten years the price of clothing has fallen 6%, and the price of communications services 23%. The price of health services has climbed 40%</p>
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<p>Looking ahead, inflation is likely to drop in the June quarter. Oil prices are <a href="https://tradingeconomics.com/commodity/crude-oil">falling</a>, and the budget petrol price relief will cut prices a further 22 cents a litre.</p>
<p>Some supply chain problems and skilled labour shortages caused by the pandemic are likely to ease. And the Australian dollar has climbed, which should push down the price of imports.</p>
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Read more:
<a href="https://theconversation.com/despite-record-vacancies-australians-shouldnt-expect-big-pay-rises-soon-180416">Despite record vacancies, Australians shouldn't expect big pay rises soon</a>
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<p>Unless there is a significant pickup in wage growth (we find out in three weeks, <a href="https://theconversation.com/there-are-4-economic-wildcards-between-now-and-election-day-the-first-gets-played-this-week-181839">three days before the election</a>) inflation may start to come back down of its own accord, without the need for the Reserve Bank to push up rates.</p>
<p>But there are certainly alternative scenarios.</p>
<h2>Over to the Reserve Bank</h2>
<p>The response of the Reserve Bank to higher prices is not as automatic as often supposed. But with the RBA cash rate at an all-time low, and an increasing risk that the current inflation will become embedded in expectations, an increase in rates is a matter of “when” not “if”.</p>
<p>As Prime Minister John Howard and Treasurer Peter Costello discovered in the election they lost in 2007, the Reserve Bank won’t hold off on increasing interest rates just because an election is imminent. </p>
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Read more:
<a href="https://theconversation.com/the-rba-has-lost-patience-on-rates-but-it-isnt-rushing-to-push-them-up-180681">The RBA has lost patience on rates, but it isn't rushing to push them up</a>
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<p>Asked if the bank would tighten rates if the evidence suggested it needed to near an election, the then governor said: “<a href="https://www.afr.com/policy/economy/rba-governor-glenn-stevens-full-exit-interview-20160907-graws7">of course we would, because we do our job</a>”.</p>
<p>After its April meeting the bank said it would wait for information before moving. </p>
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<p>over coming months, important additional evidence will be available on both inflation and the evolution of labour costs. Consistent with its announced framework, the board agreed that it would be appropriate to assess this evidence</p>
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<p>The labour cost (wage) data are released on May 18, meaning the first increase in interest rates may well not be until after the election, at the board’s June 7 meeting. If the wages data show no acceleration, it might be later.</p>
<h2>How high for mortgage interest rates?</h2>
<p>The Reserve Bank generally tries to move the “<a href="https://www.rba.gov.au/statistics/cash-rate/">cash rate</a>” (the interest rate on overnight loans) in steps of 0.25 percentage points. But, unusually, the current target is 0.10%. So it might first move 15 points to 0.25%. </p>
<p>If it wants to send a stronger signal, it will move 40 points to 0.50%. Banks are generally not shy about passing these changes on.</p>
<p>If the Reserve Bank hikes more than once, mortgage interest rates might climb from their present range of 3-3.5% to 4-5% over the course of the year.</p>
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Read more:
<a href="https://theconversation.com/there-are-4-economic-wildcards-between-now-and-election-day-the-first-is-this-week-181839">There are 4 economic wildcards between now and election day. The first is this week</a>
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<p>But the Reserve Bank will not push interest rates as high as it did during <a href="https://www.rba.gov.au/statistics/cash-rate/">previous</a> tightening cycles. Households have <a href="https://www.rba.gov.au/publications/rdp/2020/pdf/rdp2020-05.pdf">more debt</a>, meaning that a rate increase of any given size has more impact than it once would have.</p>
<p>It’s hard to know where a series of rate rises would end, but it’s a fair bet the cash rate will end up higher than the Reserve Bank’s 2-3% inflation target, making the real interest rate positive (above inflation).</p>
<p>Banks are required to assure themselves that borrowers could meet repayments if rates rose by <a href="https://www.rba.gov.au/publications/fsr/2021/oct/mortgage-macroprudential-policies.html">three percentage points</a>, which is just as well. </p>
<h2>Who will be hurt?</h2>
<p>About a third of households have a mortgage, and face higher payments. </p>
<p>But it will take a while for all of them to be affected. Around 40% of borrowers have “<a href="https://www.rba.gov.au/publications/fsr/2022/apr/household-business-finances.html">fixed-rate”</a> loans where the interest rate is only adjusted every three years. </p>
<p>And according to the Reserve Bank, typical borrowers are currently <a href="https://www.rba.gov.au/speeches/2022/sp-gov-2022-03-22-q-and-a-transcript.html">two years </a> ahead on repayments, which suggests most will be able to cope.</p><img src="https://counter.theconversation.com/content/181832/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins is a former economic forecaster in the Reserve Bank and Australian Treasury.</span></em></p>Inflation is well outside the Reserve Bank’s target band and higher than it has been for two decades.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society and NATSEM, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1818392022-04-26T03:37:21Z2022-04-26T03:37:21ZThere are 4 economic wildcards between now and election day. The first is this week<figure><img src="https://images.theconversation.com/files/459407/original/file-20220425-31363-w5crzk.png?ixlib=rb-1.1.0&rect=309%2C82%2C3328%2C1807&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>There are four economic wildcards between now and the election, and we know exactly when each will be played.</p>
<p>The first is this <a href="https://www.abs.gov.au/ausstats/abs@.nsf/webpages/abs+release+calendar">Wednesday</a> at 11.30am eastern time, when we get the official update on inflation. We’re likely to see a figure so large it will take many of us back to the 1990s, to a time before anyone under 30 was born.</p>
<p>With the exception of a short-lived blip following the introduction of the goods and services tax in 2000, inflation has scarcely been above 5% since 1990.</p>
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<p>After a series of <a href="https://www.rba.gov.au/statistics/cash-rate/">extremely large interest rate hikes</a> in the early 1990s succeeded in taming inflation, it has been close to the Reserve Bank target of 2-3% ever since – so much so that even those of us who remember the 8% inflation of the 1980s and the 18% in the 1970s have come to regard fairly steady prices as normal.</p>
<p>When <a href="https://www.abc.net.au/news/2022-04-22/vote-compass-federal-election-issues-data-climate-change-economy/101002116">ABC Vote Compass</a> asked voters to name the issue of most concern to them in the 2016 election, only 3% picked “cost of living”.</p>
<p>Only 4% picked “cost of living” in 2019. With inflation so low it had dropped below the Reserve Bank target band, and a good deal below slow-growing wages, there was nothing much to be concerned about.</p>
<h2>Suddenly, the cost of living matters</h2>
<p>That was until the last few months. Suddenly, the latest Vote Compass finds “cost of living” is voters’ <a href="https://www.abc.net.au/news/2022-04-22/vote-compass-federal-election-issues-data-climate-change-economy/101002116">second biggest</a> concern, behind only climate change. </p>
<p>This election, 13% of voters – one in eight – regard the cost of living as the most important concern of the lot, ahead of accountability, defence, health, education and COVID.</p>
<p>It has happened because prices are climbing like they haven’t in years. The official inflation rate for December (the most recent we’ve got) had prices climbing at an annual rate of 3.5%. </p>
<p>Led by petrol and food, they climbed an awful lot more in the lead-up to March, with the figures to be released on Wednesday likely to show annual inflation approaching 5%.</p>
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Read more:
<a href="https://theconversation.com/whats-in-the-cpi-and-what-does-it-actually-measure-165162">What's in the CPI and what does it actually measure?</a>
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<p>While that’s some way short of the <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220420/dq220420a-eng.htm">6.7%</a> inflation in Canada, the <a href="https://www.stats.govt.nz/indicators/consumers-price-index-cpi">6.9%</a> in New Zealand, the <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest">7%</a> in the United Kingdom, and the <a href="https://www.bls.gov/news.release/cpi.nr0.htm">8.5%</a> in the United States, each of these countries has begun increasing interest rates as a result, <a href="https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions">some quite aggressively</a>. </p>
<p>A high inflation rate on Wednesday will confirm what the <a href="https://www.forexfactory.com/news/1150662-australia-inflation-expectations-melbourne-institutes-april-survey-52">public suspects</a>: that prices really are climbing at a pace without modern precedent, and that for those who rely on wages, it is sending their living standards backwards.</p>
<p>It will also encourage the Reserve Bank to begin to push up interest rates in line with its contemporaries throughout the English-speaking world, eating into the living standards of Australians on mortgages.</p>
<h2>The second wildcard: rising interest rates</h2>
<p>That’s when the second election wildcard gets played, next <a href="https://www.rba.gov.au/statistics/cash-rate/">Tuesday May 3</a>, at 2.30pm eastern time, after the Reserve Bank board’s May meeting. </p>
<p>If inflation is especially high, there’s a chance the bank will announce it is pushing up rates, lifting its cash rate from its present all-time low of 0.10% to 0.25% or to 0.50%, and holding an afternoon press conference to explain why.</p>
<p>If fully passed on, an increase to 0.50% would add an extra $100 to the monthly cost of paying off a $500,000 mortgage.</p>
<p>The increase, and the explanation that it was much higher prices that brought it about, would be crushing for a government <a href="https://www.facebook.com/watch/?v=1009755246590673">campaigning</a> on what it is doing to address the cost of living. It would help Labor, which has made the <a href="https://7news.com.au/politics/labor-denies-pork-barrelling-accusations-c-6073061">cost of living</a> a key plank of its campaign.</p>
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Read more:
<a href="https://theconversation.com/the-rba-has-lost-patience-on-rates-but-it-isnt-rushing-to-push-them-up-180681">The RBA has lost patience on rates, but it isn't rushing to push them up</a>
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<p>There ought to be no doubt that if the bank decides it needs to raise rates at its meeting next Tuesday, it will do it then, rather than wait a month until the campaign is over. It pushed up rates during the 2007 campaign, <a href="https://www.abc.net.au/news/2007-11-07/pm-says-sorry-for-latest-rate-hike/718242">three weeks</a> before John Howard was swept from power.</p>
<p>But if inflation isn’t ultra-high but merely high, and not necessarily sustainably high, the bank is likely to wait for another piece of evidence before acting.</p>
<p>After its last meeting it said it wouldn’t lift rates until it saw “<a href="https://www.rba.gov.au/media-releases/2022/mr-22-11.html">actual evidence</a>” that inflation was “sustainably” within the 2-3% target range.</p>
<h2>The wages wildcard – 3 days before polling day</h2>
<p>To get that evidence, the board would need either very high inflation, or evidence that <a href="https://www.rba.gov.au/media-releases/2022/mr-22-11.html">wage growth</a> was high enough to sustain what might otherwise be short-lived high inflation, caused by a spike in the oil price (which has since <a href="https://tradingeconomics.com/commodity/crude-oil">retreated 16%</a>).</p>
<p>That official word on wages is the third economic wildcard, arriving at 11.30am eastern time on <a href="https://www.abs.gov.au/ausstats/abs@.nsf/webpages/abs%20release%20calendar?opendocument&dt=202205">Wednesday May 18</a>, three days before voting day.</p>
<p>To date wage growth has been frustratingly low: at <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">2.3%</a> in the year to December, well below what is needed to maintain living standards in the face of inflation, and well below what would normally be needed to make high inflation self-sustaining.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/despite-record-vacancies-australians-shouldnt-expect-big-pay-rises-soon-180416">Despite record vacancies, Australians shouldn't expect big pay rises soon</a>
</strong>
</em>
</p>
<hr>
<p>High official wage growth in the year to March could make a post-election interest rate hike all but certain, if rates haven’t already gone up ahead of the election.</p>
<p>Continued demonstrably weak wage growth – which is probably more likely – will officially confirm that prices are racing ahead of wages, just before polling day.</p>
<h2>The poll-eve jobs wildcard</h2>
<p>Which leads on to the fourth economic wildcard, to be delivered the next day, two days before polling day on <a href="https://www.abs.gov.au/ausstats/abs@.nsf/webpages/abs%20release%20calendar?opendocument&dt=202205">Thursday May 19</a> – about the only piece of economic news ahead that’s likely to play well for the government.</p>
<p>Ultra-low interest rates and massive government stimulus, originally designed to keep people in jobs during COVID but continued <a href="https://theconversation.com/budget-2022-frydenberg-has-spent-big-but-on-the-whole-responsibly-180122">beyond that</a>, have delivered an unemployment rate that rounds to 4% but is actually a touch below it at <a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">3.95%</a>, the lowest since November 1974, almost 50 years ago.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">Technically unemployment now begins with a '3'. How to keep it there?</a>
</strong>
</em>
</p>
<hr>
<p>There’s every chance the April unemployment rate will be even lower, perhaps the 3.75% the treasury expects <a href="https://images.theconversation.com/files/459660/original/file-20220426-26-3xtn2z.GIF">later in the year</a>. If it is, the Coalition will deserve and will claim a lot of the credit. Labor will be left to talk about the cost of living.</p><img src="https://counter.theconversation.com/content/181839/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Of the news on prices, wages, interest rates and unemployment, only the unemployment update looks set to be positive for the Coalition.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1817332022-04-26T00:57:02Z2022-04-26T00:57:02ZHow can more people be on unemployment benefits than before COVID, with fewer unemployed Australians? Here’s how<figure><img src="https://images.theconversation.com/files/459632/original/file-20220426-12-8gb6hg.png?ixlib=rb-1.1.0&rect=653%2C248%2C2021%2C1183&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>So low is Australia’s unemployment rate, the <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release">official count</a> says there are now just 580,300 people unemployed – the least since 2009, when Australia’s population was one-sixth smaller than it is today. Compared to just before the start of the pandemic, 184,800 fewer Australians are now unemployed.</p>
<p>Yet surprisingly, the number of Australians on unemployment benefits (now known as <a href="https://data.gov.au/data/dataset/jobseeker-payment-and-youth-allowance-recipients-monthly-profile/resource/d8e5e223-5614-476c-abe4-cefde9a35521">JobSeeker and Youth Allowance Other</a>) remains higher than at any point before the pandemic, at 935,300. This is 49,100 more than before COVID.</p>
<hr>
<p><iframe id="G3Ndx" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/G3Ndx/9/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>The apparent paradox has some people <a href="https://twitter.com/antipovertycent/status/1483973901252456454">questioning the unemployment figures</a>, while others are asking whether there are <a href="https://www.dailytelegraph.com.au/coronavirus/hospitality-industry-leaders-are-baffled-as-young-people-snub-good-jobs/news-story/83fdd64ab81a0664f2ba17c55866cd22">people getting benefits who should not</a>. </p>
<p>We think we have worked out a lot of what’s happened, and – to jump straight to one of our important findings – it isn’t the unemployment figures that are at fault.</p>
<p>You might be surprised to discover that many Australians who are unemployed are not on unemployment benefits. </p>
<p>Prior to COVID, the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2019/December/Overlap_between_unemployed_and_the_dole">Parliamentary Library</a> found only about 30% of unemployed Australians were on benefits. It used the <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6105.0Feature%20Article54July%202014">Bureau of Statistics</a> survey of income and housing to estimate the overlap between benefits and unemployment.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/technically-unemployment-now-begins-with-a-3-how-to-keep-it-there-181242">Technically unemployment now begins with a '3'. How to keep it there?</a>
</strong>
</em>
</p>
<hr>
<p>Even odder, many of the Australians on those benefits (paid to those with the “<a href="http://www5.austlii.edu.au/au/legis/cth/bill_em/sslarb2017500/memo_0.html">capacity to work now or in the near future</a>”) are not unemployed as defined by the Bureau of Statistics and international statistical agencies. </p>
<p>Some are not seeking and not available for work. Others are in part-time work, able to get benefits because their employment income is low – but therefore not unemployed.</p>
<h2>Unemployment and benefits used to move together</h2>
<p>For most of the past 40 years, the number of people on unemployment benefits and the number unemployed have generally tracked each other, although since 1994 there have been more people on benefits than unemployed.</p>
<hr>
<p><iframe id="8qJcT" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/8qJcT/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>So what explains <a href="https://socialpolicy.crawford.anu.edu.au/sites/default/files/events/attachments/2021-10/whats_going_on_presentation_october.pdf">what’s happened since COVID?</a></p>
<p>One thing to note is that it is perfectly legal to receive unemployment benefits if you have a part-time job. In fact, Australian governments have been trying to encourage this since the 1980s. </p>
<p>The Bureau of Statistics and international statistical agencies define “employed” as at least <a href="https://www.abs.gov.au/websitedbs/D3310114.nsf/home/labour+force+explained">one hour per week</a>. Yet the Department of Social Services makes JobSeeker available to low-income Australians working <a href="https://www.servicesaustralia.gov.au/who-can-get-jobseeker-payment?context=51411">casual and part-time</a>.</p>
<p>Before COVID, in December 2019, about 140,000 people – 7% of those on benefits – were also working part-time.</p>
<p>Also in December 2019, 407,000 people (about half those receiving unemployment benefits) were classified as “non-jobseekers”. </p>
<p>“Non-jobseekers” can receive JobSeeker in a range of circumstances, including</p>
<ul>
<li><p>undertaking approved full-time voluntary work or a combination of voluntary and part-time work</p></li>
<li><p>undertaking one or more other activities including training, education and self-employment development that are not job search</p></li>
<li><p>being temporarily ill or incapacitated</p></li>
<li><p>being a single principal carer (such as a single parent) granted an exemption from the requirement to search for work for reasons including foster care and home schooling</p></li>
</ul>
<p>How many people there are in these situations now is hard to determine, not least because the Department of Social Services stopped publishing the number of “non-jobseekers” when the benefit started being called JobSeeker in early 2020.</p>
<p>It is likely that before COVID, in December 2019, around 267,000 people were both unemployed and receiving the main unemployment benefit. Given that 667,000 people were classified as unemployed at the time, this suggests that only around 40% of those classified as unemployed were receiving benefits.</p>
<p>Among those not receiving unemployment benefits would have been</p>
<ul>
<li><p>people excluded by the partner income test (before COVID an unemployed person whose partner earned more than $925 per week was ineligible, making more than <a href="https://theconversation.com/coronavirus-supplement-your-guide-to-the-australian-payments-that-will-go-to-the-extra-million-on-welfare-134358">two-thirds</a> of second earners ineligible)</p></li>
<li><p><a href="https://www.servicesaustralia.gov.au/sole-trader-or-partnership-income?context=5141">sole traders</a> who face more complex income-testing procedures intended to limit access to payments</p></li>
<li><p>people with $5,500 or more in <a href="https://www.servicesaustralia.gov.au/liquid-assets-waiting-period?context=51411">available liquid assets</a>, who have to wait between one and 13 weeks. If they find a job before then, they will have been counted as unemployed without receiving payments</p></li>
<li><p><a href="https://www.servicesaustralia.gov.au/seasonal-work-preclusion-period?context=51411">seasonal workers</a> excluded by preclusion periods applying to people who have earned more than average earnings in the six months before they claim. This applies to “fly-in, fly-out workers”, <a href="https://www.adelaidenow.com.au/news/south-australia/eyre-peninsula-abalone-divers-can-earn-up-to-120000-in-just-50-days/news-story/c7e824a285de12ba6b2585fb76d6f0ac#">lobster and abalone fishermen</a>, people working in arts and entertainment, and people doing relief work </p></li>
<li><p>people who lost their job facing a preclusion period because they were paid a <a href="https://www.servicesaustralia.gov.au/income-maintenance-period?context=51411">lump sum</a> that was intended to cover sick leave, annual leave, long service leave, a termination payment or a redundancy payment </p></li>
<li><p>newly arrived permanent residents in Australia for less than four years face a waiting period (<a href="https://guides.dss.gov.au/social-security-guide/3/1/2/40">NARWP</a>). This was 26 weeks when imposed in 1993, then extended to 104 weeks in 1997 and 208 weeks in 2019</p></li>
<li><p>temporary foreign visa holders. Students, backpackers, skilled visa holders and many people from New Zealand are not eligible for benefits. In the last census, there were 104,700 temporary visa holders unemployed, making up 13.5% of all the unemployed people in Australia</p></li>
<li><p>people receiving other payments including parenting payment single, carers payment and the disability support pension. Our calculations suggest there were around 75,000 people unemployed but receiving one of these other payments in 2017-18, about 10% of the unemployed in that year.</p></li>
</ul>
<h2>Many chose not to claim – and then came COVID</h2>
<p>Not all people eligible for unemployment benefits claim them.</p>
<p>Among the reasons identified in <a href="https://www.oecd.org/els/soc/30901173.pdf">international studies</a> are lack of information, the level of benefits (some can be so low it is not seen as worth the effort) and stigma.</p>
<p>Since 2015, there has been considerable publicity given to a government program presented as recovering overpayments known as “<a href="https://theconversation.com/robodebt-was-a-fiasco-with-a-cost-we-have-yet-to-fully-appreciate-150169">Robodebt</a>”. This might have discouraged people from claiming, at least until the widespread distribution of benefits during COVID.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/your-guide-to-coronavirus-payments-for-the-extra-million-on-welfare-134358">Your guide to coronavirus payments for the extra million on welfare</a>
</strong>
</em>
</p>
<hr>
<p>And then came COVID. In just four months between March and July 2020, the number of unemployed people shot up 220,000, the number on unemployment benefits soared 735,000 and the number employed plunged 533,000.</p>
<p>During those months, the highly-publicised <a href="https://theconversation.com/coronavirus-supplement-your-guide-to-the-australian-payments-that-will-go-to-the-extra-million-on-welfare-134358">Coronavirus Supplement</a> effectively doubled the size of unemployment benefits and removed much of the stigma associated with claiming them.</p>
<p>As well, many of the conditions that limited access to the benefits were <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp2021/ChangesCOVID-19SocialSecurity">temporarily suspended</a>.</p>
<p>These included preclusion periods, making instantly eligible not only the people who lost their jobs, but also people already unemployed who had been ineligible.</p>
<p>Receiving benefits became easier and more normal, and also more worthwhile.</p>
<h2>More people have stayed on benefits</h2>
<p>These more generous eligibility conditions were wound back between September and December 2020. While the number of recipients declined substantially, it remained and still remains well above the number unemployed.</p>
<p>We have calculated what we call “net coverage” of the JobSeeker and Youth Allowance (Other) unemployment benefits.</p>
<p>This excludes from the total people who the Bureau of Statistics would not define as unemployed (those with earnings from work, and those with only a partial capacity to work) and presents it as a proportion of the total unemployed.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/government-slashes-covid-payment-when-people-need-it-most-175146">Government slashes COVID payment when people need it most</a>
</strong>
</em>
</p>
<hr>
<p>It suggests that pre-COVID, only 44% to 52% of people the bureau counted as unemployed were on unemployment benefits. </p>
<p>As COVID payments peaked, this shot up to around 100% of all unemployed people being on benefits.</p>
<p>Even now, with special payments stopped, it remains higher than it was before COVID, at about 75%.</p>
<hr>
<p><iframe id="Dy8rc" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/Dy8rc/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>Put differently, on our (admittedly imperfect) measure, about one in four of Australia’s unemployed are not receiving benefits, whereas before COVID it was one in two.</p>
<h2>The missing data we still need</h2>
<p>What we do know is that the share of those on unemployment benefits with earnings has climbed from 17% to 21% since COVID, possibly as a result of greater take-up. </p>
<p>There are about 60,000 more people in part-time work and on payments than before COVID.</p>
<p>We also know that the number of people aged 65 years and over receiving JobSeeker has roughly tripled in the past three years (from a low base), with roughly 23,000 more people over 65 on JobSeeker.</p>
<p>In 2021 the age pension age rose from 66 years to 66 years and six months. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/arts-need-a-covid-stimulus-package-heres-what-it-should-look-like-133803">Arts need a COVID stimulus package. Here's what it should look like</a>
</strong>
</em>
</p>
<hr>
<p>And we know that rules limiting the access of relatively highly paid seasonal workers to JobSeeker will have worked differently during COVID, as many will not have had the opportunity to work they had before. </p>
<p>This would be especially true for workers in <a href="https://australiainstitute.org.au/post/when-the-show-cannot-go-on-rebooting-australias-arts-entertainment-sector-after-covid-19/#:%7E:text=%E2%80%9CCOVID%2D19%20has%20badly%20damaged,the%20pandemic%2C%E2%80%9D%20Eltham%20said">arts and entertainment</a>.</p>
<p>Also, people excluded by the residence waiting periods and temporary foreign workers are likely to form a lower share of the Australian population than before borders were closed.</p>
<p>But all of our explanations are tentative, since we don’t have the data to be definitive. We would know more if the Department of Social Services and the Australian Bureau of Statistics improved the quality of their data and the Department of Social Services made public more of the data it has.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/albanese-has-dropped-labors-pledge-to-boost-jobseeker-with-unemployment-low-is-that-actually-fair-enough-181256">Albanese has dropped Labor's pledge to boost JobSeeker. With unemployment low, is that actually fair enough?</a>
</strong>
</em>
</p>
<hr>
<p>But what we’ve uncovered suggests that the unusually high number of people on unemployment benefits is neither a sign that there are more people on benefits <a href="https://www.abc.net.au/news/2022-04-24/ignore-people-pushing-the-dole-bludger-narrative/101003752">who don’t want to work</a> than before, nor a sign that the official unemployment rate is less reliable than before. </p>
<p>Decisions made on the assumption that the unemployment rate is unreliable or that the nearly one million Australians on unemployment benefits don’t want to work would do us a disservice.</p><img src="https://counter.theconversation.com/content/181733/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford receives funding from the Australian Research Council. He is a Fellow of the Centre for Policy Development.</span></em></p><p class="fine-print"><em><span>Bruce Bradbury receives funding from the Australian Research Council, conducts contract research for other government bodies and is involved in a Poverty and Inequality research collaboration between UNSW and ACOSS. </span></em></p>You might be surprised to know that many unemployed Australians are not on unemployment benefits. And then came COVID – which saw a big shift in how many people were able and willing to claim.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityBruce Bradbury, Associate Professor, Social Policy Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1778212022-03-02T05:58:26Z2022-03-02T05:58:26ZWednesday’s GDP numbers are impressive, but they are for the December quarter, when we were bouncing back from Delta<p>Australia’s economy bounced back a welcome 3.4% in the December quarter of 2021, more than reversing the 1.9% lockdown-related decline in the September quarter. It was the sixth-biggest increase in the 60 years the figures have been compiled. </p>
<hr>
<p><strong>Australian quarterly gross domestic product</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449364/original/file-20220302-23-15ler5k.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Chain volume measures, seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<p>The economy grew by 4.2% over the year to December, making it 3.4% bigger than it was two years earlier, before COVID. </p>
<p>This is <a href="https://www.abs.gov.au/articles/international-and-state-economies-during-december-quarter-2021">similar</a> to what happened in the United States, but better than what happened in the European Union and South Korea. The economies of the UK and Japan are still smaller than they were before COVID. </p>
<p>While it is impressive in the circumstances, before the pandemic real GDP was set to climb 6% rather than 3.4% over those two years. That’s what the <a href="https://www.rba.gov.au/publications/smp/2019/nov/forecasts.html">Reserve Bank</a> was forecasting. </p>
<h2>The South East versus the rest</h2>
<p>It depended very much on where you lived. NSW, Victoria and the ACT were constrained by lockdowns in the September quarter.</p>
<p>Those states bounced back most strongly in the December quarter. </p>
<p>It is notable, and concerning, that in the other states the best measure of total spending, state final demand, barely grew at all or went backwards.</p>
<hr>
<p><strong>State final demand, December quarter</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=201&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=201&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=201&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=253&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=253&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449647/original/file-20220302-23-mljvg1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=253&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<p>Household spending was the main driver of the stronger GDP.</p>
<p>It bounced back in the December quarter as unemployment fell, vaccination rates rose and consumer confidence climbed ahead of Omicron in the belief COVID was coming under control.</p>
<hr>
<p><strong>Household final consumption expenditure</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449370/original/file-20220302-15-1oxnfxy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chain volume measures, seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<p>Spending on services surged. Personal and other services, the category that includes hairdressing, climbed by a record 15%. </p>
<p>There were also some big increases in spending on non-essential goods. Purchases of clothing and footwear jumped by more than 40%.</p>
<hr>
<p><strong>Components of household final consumption expenditure</strong></p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=310&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=310&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=310&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=390&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=390&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449434/original/file-20220302-23-1acvc7q.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=390&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">December quarter growth in real household final consumption expenditure.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<p>Households have been saving an unusually high proportion of their income during the pandemic. </p>
<p>The saving ratio soared to a record high early in the pandemic, fell during the 2020 recovery, soared again during the 2021 lockdowns, and fell in the December quarter. </p>
<p>But it remains, as the Treasurer said in his press conference, around three times what it would have otherwise been without the pandemic.</p>
<hr>
<p><strong>Household saving ratio</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449372/original/file-20220302-27-180zpm5.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ratio of saving to net-of-tax income, seasonally adjusted.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<p>Much of the saving is the result of caution, but much also reflects government support programs that maintained incomes at times when people were limited in their ability to spend on travel, restaurants, cinemas, gyms and other services. </p>
<p>Some of the frustrated services spending was diverted to goods, exacerbating supply bottlenecks and contributing to inflation.</p>
<p>Inventories climbed $1.5 billion after a fall of $2.9 billion in the September quarter as wholesalers restocked, also contributing to GDP growth. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-cut-unemployment-faster-than-predicted-why-stop-now-177124">Australia cut unemployment faster than predicted – why stop now?</a>
</strong>
</em>
</p>
<hr>
<p>Export volumes fell as the reduction in coal exports (reflecting heavy rain and labour constraints) outweighed the increase in agricultural exports (reflecting a record grain harvest). </p>
<p>Housing construction also detracted from growth as shortages of workers and materials caused delays in building. </p>
<h2>Sharing the cake</h2>
<p>How were the proceeds of this higher GDP shared among Australians? </p>
<p>Treasurer Josh Frydenberg was keen to point out the wages bill climbed by more than 5% through the year as more workers found jobs, higher bonuses were paid and workers switched to better jobs and got promotions, a form of wage growth not captured in the official <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">wage price index</a>.</p>
<p>The wages share of national income remained near an all-time low. Wage growth is lagging price growth, meaning workers are getting a smaller share of the pie than they have been used to.</p>
<hr>
<p><strong>Wages share of total factor income</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449400/original/file-20220302-27-bckrtr.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Compensation of employees including wages, salaries and social security contributions.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">ABS National Accounts</a></span>
</figcaption>
</figure>
<hr>
<h2>Looking forward</h2>
<p>The December quarter was between the bulk of Delta and the bulk of Omicron. </p>
<p>After the outbreak of Omicron in late December, hours worked slid <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/jan-2022">9%</a> in January as workers became sick, isolated and caring for friends and family who were sick.</p>
<p><a href="https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/economics-research/er20220209BullConsumerSentiment.pdf">Consumer sentiment</a> deteriorated in both January and February as petrol prices rose and attention turned to interest rate rises.</p>
<p>Russia’s invasion of Ukraine, and the subsequent further surge in petrol prices, is likely to depress sentiment further. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/inflation-hits-3-5-but-it-wont-budge-the-reserve-bank-on-interest-rates-175045">Inflation hits 3.5%, but it won't budge the Reserve Bank on interest rates</a>
</strong>
</em>
</p>
<hr>
<p>This means the next GDP release, covering the March quarter, will quite likely go backwards, taking GDP growth down with it.</p>
<p>Fortunately for the government, it isn’t due for release until Wednesday <a href="https://www.abs.gov.au/ausstats/abs@.nsf/webpages/abs%20release%20calendar?opendocument&dt=202206">June 1</a>, safely after the election which must be held by Saturday <a href="https://antonygreen.com.au/when-can-the-next-federal-election-be-held/">May 21</a> to avoid a separate half-Senate election.</p><img src="https://counter.theconversation.com/content/177821/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hawkins was formerly an economic analyst and forecaster in the Reserve Bank and Treasury.</span></em></p>Away from the states bouncing out of lockdown, spending growth was weak. The next figures, to be released after the election, might show the economy turning down.John Hawkins, Senior Lecturer, Canberra School of Politics, Economics and Society and NATSEM, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1727622021-11-30T04:24:30Z2021-11-30T04:24:30ZGDP is like a heart rate monitor: it tells us about life, but not our lives<figure><img src="https://images.theconversation.com/files/434613/original/file-20211130-21-ihs9bh.jpg?ixlib=rb-1.1.0&rect=356%2C267%2C2801%2C1680&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>How much cash would you need to be paid to agree to live without a smartphone for a year? </p>
<p>If you are like the typical American, the answer is <a href="https://www.hoover.org/sites/default/files/research/docs/kane_webreadypdf.pdf">US$10,000</a> – which is far, far more than what we are actually charged for having and using smartphones.</p>
<p>How much would you need to be paid to live without a computer? </p>
<p>According to the same research, just published by Stanford University’s Hoover Institution, a typical American would want US$25,000 to live computer-free for a year.</p>
<p>For the GPS system that lets us map where we are on all our devices, the answer is US$3,000; for streaming services such as Netflix the answer is another US$3,000.</p>
<p>For refrigeration the answer is US$10,000; for air conditioning, another US$10,000; and for running water US$50,000.</p>
<p>The point of this study, by economist <a href="https://www.hoover.org/sites/default/files/research/docs/kane_webreadypdf.pdf">Tim Kane</a>, is that if we add up the worth to us of everything the economy produces each year, we get much, much more than the gross domestic product – even though GDP is meant to be a summation of the prices paid each year.</p>
<p>Not a day goes by when we don’t get astounding value for money: on Kane’s estimate, about 20 times what we pay.</p>
<h2>GDP monitors changes, not our lives</h2>
<p>It’s a useful perspective to bear in mind ahead of the latest Australian gross domestic product figures, being released <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release">on Wednesday</a>. </p>
<p>Those figures will show Australia spent less, earned less and produced less in the lockdown-affected September quarter months of July, August and September than in the three months before – about 3% less on private estimates.</p>
<p>It won’t be a “recession” because in Australia that’s generally taken to mean two consecutive quarters of those things going backwards. And we already know spending, earning and production all started climbing as soon as the lockdowns ended at the beginning of the quarter we are in now.</p>
<p>The GDP has the same relationship to life as a heart rate monitor has to health.</p>
<h2>There’s more to GDP than you might think</h2>
<p>Behind the headline figure you hear about are actually three different measures.</p>
<p>GDP(P) is a measure of everything that’s <em>produced</em> in the quarter. The Bureau of Statistics has the unenviable job of adding up most things that are produced at market prices (and having a stab at trying to infer market prices where they are not apparent) in industries as diverse as mining, financial services and education.</p>
<p>It tries to count each thing only once, which is difficult because some things are used as inputs to others. Its work is made harder by relying partly on surveys and partly on complete sets of data from organisations such as the Tax Office.</p>
<p>Ask whether it uses guess work, you will be told it uses “<a href="https://unstats.un.org/unsd/economic_stat/china/pgdp/The%20Production%20Approach%20to%20Measuring%20GDP.pdf">informed judgement</a>”. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/four-gdp-graphs-that-show-how-well-australia-was-doing-before-delta-166817">Four GDP graphs that show how well Australia was doing, before Delta</a>
</strong>
</em>
</p>
<hr>
<p>GDP(E) is a totalling of government and household <em>expenditure</em> to buy those products. After adjusting for imports and exports it ought to equal GDP(P), but imperfections in measurement mean it usually doesn’t. </p>
<p>Then there’s GDP(I), which is a measure of the <em>income</em> households and businesses get from working and selling those products. Again, it ought to equal the other two, but it usually doesn’t.</p>
<p>After trying to get the three measures nearer each other (perhaps there was something somebody missed) the technicians in the bureau simply average the three, producing GDP(A). That’s what goes up on the <a href="https://www.abs.gov.au/">ABS website</a> at 11:30am AEDT Wednesday, followed by a Treasurer’s press conference and loads of analysis.</p>
<h2>It needn’t indicate an underlying condition</h2>
<p>Just as a heart rate monitor needn’t tell us much about health, because even in healthy people hearts beat slower while sleeping and faster while awake, GDP needn’t tell us that much about the condition of our lives.</p>
<p>A lot of the economy went to sleep during this year’s and last year’s lockdowns and is now waking up. The GDP will show that, but at least on Wednesday it won’t tell us more than that.</p>
<p>As it happens, economic growth has been weakening over time. Annual GDP growth is no longer the 3-4% it typically was between the early 1990s recession and the 2008 financial crisis. In the decade leading up to COVID it has been much lower, rarely touching 3%.</p>
<hr>
<p><strong>Annual financial year GDP growth</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434627/original/file-20211130-13-1t9mgkr.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Financial year on financial year growth, 2002-03 to 2018-19.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-system-national-accounts/2020-21#data-download">ABS</a></span>
</figcaption>
</figure>
<hr>
<p>Put starkly, for little-understood reasons unrelated to quarterly fluctuations or COVID, we are getting better off more slowly than we were.</p>
<p>There are always people who say this doesn’t matter, we should be happy with what we had (and as I noted, much of what we’ve had isn’t counted in the GDP).</p>
<h2>There is an underlying condition nonetheless</h2>
<p>But it matters a good deal, because ever since economic growth took off in the 1870s we’ve grown used to things continually getting better, and have come to expect it. </p>
<p>US economic historian Brad Delong uses an 1880s science fiction book to illustrate how much we’ve come to regard improving living standards as a birthright.</p>
<p>In <a href="https://www.google.com.au/books/edition/Looking_Backward/xpHtvz4bNZ0C">Looking Backward</a>, Edward Bellamy purports to look back from the year 2000. </p>
<p>At one point a hostess asks if he would like to hear some music. Instead of playing the piano, she merely touched one or two screws and “immediately the room was filled with the music of a grand organ”, one of four she could dial up by landline.</p>
<p>It appeared to him that</p>
<blockquote>
<p>if we could have devised an arrangement for providing everybody with music in their homes, perfect in quality, unlimited in quantity, suited to every mood, and beginning and ceasing at will, we should have considered the limit of human felicity already attained, and ceased to strive for further improvements.</p>
</blockquote>
<p>He got it wrong.</p><img src="https://counter.theconversation.com/content/172762/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This story is part of a series on financial and economic literacy funded by Ecstra Foundation.</span></em></p>Looking beyond the latest quarterly GDP figures, the truth is we’re getting better off more slowly than before.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1665662021-08-24T04:50:53Z2021-08-24T04:50:53ZThe official figures say wages aren’t growing —
here’s why they’re wrong<figure><img src="https://images.theconversation.com/files/417538/original/file-20210824-19-4nqcvj.jpg?ixlib=rb-1.1.0&rect=13%2C41%2C3081%2C1754&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Peterfz30/Shutterstock</span></span></figcaption></figure><p>Have you heard about the latest wage figures? I hope not. They’re meaningless.</p>
<p>What the widely quoted measure of <a href="https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/average-weekly-earnings-australia/may-2021">average weekly earnings</a> purports to show is that wages grew a mere 0.1% over the year to May. It’s not true. It’s not what happened. For most of us, wages grew by much more.</p>
<p>That’s not to say wage growth has been high — the best estimate is that private sector wages have climbed 1.9% over the past year and public sector wages a record low 1.3% — but both are still well above nothing, and generally well above our near-record low rates of consumer price inflation.</p>
<p>A check-in with reality would tell you that mid last year the Fair Work Commission lifted award wages <a href="https://www.fairwork.gov.au/about-us/news-and-media-releases/2020-media-releases/july-2020/20200701-awr-media-release-1-july-2020">1.75%</a>. Mid this year it lifted them <a href="https://www.fairwork.gov.au/about-us/news-and-media-releases/2021-media-releases/july-2021/20210701-annual-wage-review-2021-media-release">2.5%</a>.</p>
<p>So how could it be that the official figures, published by a trusted organisation, the Australian Bureau of Statistics, show average earnings static, climbing just 0.1%?</p>
<p>The first thing to say is that the bureau is probably embarrassed by the figures.</p>
<p>They are “not designed to produce movement in earnings data” it says on its website, before acknowledging that’s <a href="https://www.abs.gov.au/methodologies/average-weekly-earnings-australia-methodology/may-2021">exactly what they are used for</a>.</p>
<h2>‘Not designed’ to measure wage growth</h2>
<p>Australia’s pensions are adjusted twice a year in accordance with a formula that includes average weekly earnings. </p>
<p>The figure is built into private contracts. If it wasn’t published, many contracts wouldn’t work.</p>
<p>To create it, the bureau surveys about 5,130 employers every six months, asks what they are paying their workers, and uses the answers to calculate an average female wage, an average male wage, an average part-time wage, an average full-time wage, and a lot of other averages besides.</p>
<h2>The ‘average wage’ isn’t typical</h2>
<p>One problem is that averages are not representative. The survey suggests the average full-time wage is <a href="https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/average-weekly-earnings-australia/may-2021#methodology">A$90,330</a>, whereas in reality six in ten earn less. </p>
<p>The mid-way (median) full-time worker earns <a href="https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/employee-earnings-and-hours-australia/latest-release">$10,000 less</a>. The average is boosted by a few enormously high earners and can’t be taken seriously.</p>
<p>An entirely separate problem arises when you try to use averages to calculate growth. The average is only an average of what’s averaged, and that can change.</p>
<h2>When low-wage workers lose jobs…</h2>
<p>Here’s an example. What would happen if a recession caused everyone working only four hours per week to lose two hours? It would push their earnings down and push down average weekly earnings, which would be about right.</p>
<p>But what if each of those people lost a further two hours, taking their hours down to zero. Their low hours would no longer be included in the total to be averaged, and (without them in it) average earnings would climb.</p>
<h2>…the average wage goes up</h2>
<p>That’s what happened a bit over a year ago. The bureau says COVID restrictions “led to a large decrease in the number of jobs, people employed and hours worked, with lower-paid jobs and industries particularly impacted, including jobs in accommodation and food services, arts and recreation services”.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/417536/original/file-20210824-23-6e09hl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Unemployed catering workers pushed the average wage up.</span>
<span class="attribution"><span class="source">PK Studio/Shutterstock</span></span>
</figcaption>
</figure>
<p>The loss of those lower-paid and low hours jobs in catering, the arts and other industries “had the effect of increasing the value of average weekly earnings”.</p>
<p>Layoffs pushed the average wage up.</p>
<p>Fortunately, the bureau says by November many of the low-wage workers laid off got some hours back, depressing growth in the average wage (but not growth in any actual wages) resulting in recorded growth of just 0.1% in the year to May.</p>
<p>Many have probably since lost hours with this year’s renewed lockdowns, pushing average wages (but not actual wages) higher again.</p>
<p>It’s enough to make you think the legislation and contracts should switch from a measure that’s close to worthless to one that actually measures wage growth.</p>
<p>The bureau offers such a measure. It’s called the <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">wage price index</a>, and the bureau has been trying to encourage people to switch to it since 1998.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/other-australians-dont-earn-what-you-think-59-538-is-typical-162251">Other Australians don't earn what you think. $59,538, is typical</a>
</strong>
</em>
</p>
<hr>
<p>It is also built around a survey of employers, but rather than asking how much they pay each worker, it asks how much they pay for each job title and classification. The bureau calculates growth by comparing like with like, regardless of how many people were employed in each classification at the time.</p>
<hr>
<p><strong>Wage Price Index</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=247&fit=crop&dpr=1 600w, https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=247&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=247&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/435814/original/file-20211206-19-978iqs.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Annual growth in total hourly rates of pay excluding bonuses.</span>
<span class="attribution"><a class="source" href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/sep-2021">ABS</a></span>
</figcaption>
</figure>
<hr>
<p>The results are believable: private sector like-for-like wages climbed 1.9% over the past year, and public sector wages 1.3%.</p>
<p>But even they are not right when it comes to the wage growth of individuals.</p>
<p>Individuals get promoted, and (much less often) demoted. They change jobs, usually for better ones.</p>
<h2>People aren’t positions</h2>
<p>So if you were trying to use the recent like-for-like wage growth of around 2% per year as a guide to what will happen to your own wage (in order, for instance, to work out whether you could afford a mortgage) you would probably guess too low.</p>
<p>It’s why many Australians — those who’ve got not only regular pay rises but also promotions — wonder what the fuss about low wage growth is about.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-say-cutting-immigration-is-no-way-to-boost-wages-165394">Top economists say cutting immigration is no way to boost wages</a>
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</em>
</p>
<hr>
<p>A good measure of the actual wage growth of Australians doesn’t yet exist, although it might soon. The bureau is working on tracking individuals through the use of payroll data reported to the tax office.</p>
<p>In the meantime the (<a href="https://melbourneinstitute.unimelb.edu.au/hilda">HILDA</a>) Household, Income and Labour Dynamics in Australia survey that tracks 17,000 Australians over time finds that the actual wage growth of full-time workers is indeed higher than the like-for-like figure suggests (which might help explain soaring home prices) although it too is weakening.</p>
<p>Part time workers don’t seem to get the same benefit. </p>
<p>As <a href="https://pursuit.unimelb.edu.au/articles/is-wages-growth-really-as-weak-as-we-think">Mark Wooden</a>, director of the HILDA survey puts it, “Australians in full-time work are doing pretty well – provided they remain in employment”.</p><img src="https://counter.theconversation.com/content/166566/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When low-wage workers lose jobs the average wage goes up. There’s a better measure, but we’re not using it.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1658002021-08-10T01:44:35Z2021-08-10T01:44:35ZLGBTIQ+ people are being ignored in the census again. Not only is this discriminatory, it’s bad public policy<p>“Do you know how many LGBTIQ+ folks live in Australia? It turns out no one does, and we’re not about to find out in the upcoming census.” </p>
<p>Courtney Act, an Australian drag queen and television personality, <a href="https://m.facebook.com/EqualityAustralia/videos/187949036711096/?refsrc=deprecated&locale2=ne_NP&_rdr">made this point</a> on Facebook last week as part of Equality Australia’s push to have LGBTIQ+ people counted in the census. </p>
<p>Once again, the census is failing to accurately collect data on sex, sexual orientation and gender diversity.</p>
<p>The census ticks around every five years to provide a snapshot of who we are and how we are changing. It is not just about collecting statistics about where we live, who we live with, our work, lives, income and health, but it also provides crucial insights to inform the vital services that Australians need. </p>
<p>We cannot effectively support all of Australia if we do not count all of Australia (and it’s <a href="https://theconversation.com/we-need-to-count-lgbti-communities-in-the-next-census-heres-why-124769">not the first time we’ve argued this too</a>). </p>
<p>Currently, we do not understand how many people identify as LGBTIQ+, where they are, or anything about their socioeconomic status, health, relationships and more. </p>
<p>It is a matter of serious concern, particularly given LGBTIQ+ folk often face <a href="https://d3n8a8pro7vhmx.cloudfront.net/lgbtihealth/pages/549/attachments/original/1620871703/2021_Snapshot_of_Mental_Health2.pdf?1620871703">higher suicide and mental health concerns</a> and worrying rates of <a href="https://www.dvrcv.org.au/sites/default/files/Family-violence-in-an-LGBTIQ-context-Kate-OHalloran.pdf">domestic violence</a>. LGBTIQ+ people also have unique needs when it comes to the provision of services, from health to housing and beyond. </p>
<p>As Amnesty International <a href="https://www.amnesty.org.au/lgbtqia-australians-have-been-left-out-of-the-2021-census/">notes</a>, the census’s lack of appropriate questions capturing LGBTIQ+ communities and experiences “will result in a service gap that constitutes discrimination of the LGBTQIA+ community”.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1422747933343113220"}"></div></p>
<h2>So, what was supposed to be asked?</h2>
<p>In <a href="https://parlinfo.aph.gov.au/parlInfo/download/publications/tabledpapers/0d17ec78-cb05-40e1-81bf-990299e32d4d/upload_pdf/OPD%20219%20gender.pdf;fileType=application%2Fpdf#search=%22senate%20orders%22">a submission to the Senate in 2019</a>, questions around sexuality and gender identity were proposed for inclusion in the 2021 census. These were developed in consultation with LGBTIQ+ communities, and can generally be seen as best practice. </p>
<p>Then the Australian Bureau of Statistics (ABS) walked away from them. Why?</p>
<p>The ABS voted against these new questions due to <a href="https://www.theguardian.com/australia-news/2019/dec/03/abs-said-census-questions-on-gender-and-sexual-orientation-risked-public-backlash">perceived public backlash</a> - particularly after some of the <a href="https://www.abc.net.au/news/2016-08-09/abs-website-inaccessible-on-census-night/7711652">technical difficulties of the 2016 #censusfail</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1424545411394523136"}"></div></p>
<p>The decision came after assistant treasurer Michael Sukkar <a href="https://qnews.com.au/minister-under-fire-after-lgbtiq-census-questions-dropped/">expressed “a preference”</a> about not including the questions in testing, David Kalisch, the former Australian statistician, said in 2019. </p>
<p>This is despite the fact that in qualitative testing of census questions, those on gender and sexuality “<a href="https://parlinfo.aph.gov.au/parlInfo/download/publications/tabledpapers/0d17ec78-cb05-40e1-81bf-990299e32d4d/upload_pdf/OPD%20219%20gender.pdf;fileType=application%2Fpdf#search=%22senate%20orders%22">performed well</a>” with both target and non-target populations. These draft questions were also recommended by multiple federal departments. </p>
<p>And, in 2019 Senate submission documents, the ABS itself noted there are “no other suitable alternative data sources” to collect such crucial information. It also identified data on LGBTIQ+ communities as “<a href="https://parlinfo.aph.gov.au/parlInfo/download/publications/tabledpapers/0d17ec78-cb05-40e1-81bf-990299e32d4d/upload_pdf/OPD%20219%20gender.pdf;fileType=application%2Fpdf#search=%22senate%20orders%22">of current national importance</a>”.</p>
<p>It’s also despite the fact that the majority of Australians voted for marriage equality, and Australia has generally taken more progressive steps towards gender and sexuality inclusion in the last few years.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/census-2021-is-almost-here-whats-changed-since-censusfail-whats-at-stake-in-this-pandemic-survey-164784">Census 2021 is almost here — what's changed since #censusfail? What's at stake in this pandemic survey?</a>
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</em>
</p>
<hr>
<h2>What’s being asked instead?</h2>
<p>Nothing in this year’s census asks specifically about sexuality. The question on gender identity and sex has also conflates the concepts — <a href="https://theconversation.com/the-difference-between-sex-and-gender-and-why-both-matter-in-health-research-162746#:%7E:text=The%20term%20sex%20is%20generally,men%20and%20gender%2Ddiverse%20people.">despite international efforts to address the issue</a>.</p>
<p>Although some of the questions on cohabitation and families make it possible to garner some data on people in same-sex relationships, only those who are couples and who live together are counted. </p>
<p>The question about sex/gender limits choices to male/female/non-binary sex. It obscures data on transgender and intersex folk and does not recognise differences in gender identity (how a person sees themselves or the social/cultural aspects of identity) and sex (a person’s anatomy or biological sex characteristics). </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1421017995686473729"}"></div></p>
<p>Further, question 37 erases the experience of some trans people entirely. It asks, “for each female, how many babies has she ever given birth to?”. This blatantly ignores the fact that many transmen (often those who have transitioned from female to male) <a href="https://7news.com.au/news/social/medicare-figures-show-dozens-of-australian-men-are-now-giving-birth-every-year-c-389349">can and have given birth</a>.</p>
<p>While the census has included questions around other identity categories, including race, ethnic ancestry, Aboriginal and Torres Strait Islander peoples and people living with a disability, LGBTIQ+ remains overlooked — and without good reason.</p>
<h2>How does Australia compare globally?</h2>
<p>There’s a major gap globally in the inclusion of these data on national census questionnaires.</p>
<p>Much was made of the hasty withdrawal of questions relating to gender and sexuality in the <a href="https://www.nbcnews.com/feature/nbc-out/lgbtq-americans-won-t-be-counted-2020-u-s-census-n739911">2020 US census</a>, a move that was highly scrutinised in the political pressure cooker of the Trump administration. </p>
<p>In a country where federal marriage equality was achieved in 2015, millions of LGBTIQ+ Americans will now have to wait until 2030 (at least) to contribute their experiences to the US census. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"847185547403689984"}"></div></p>
<p><a href="https://www.theguardian.com/uk-news/2020/oct/18/census-to-ask-about-sexual-orientation-for-the-first-time">In the UK</a>, voluntary questions on sexual orientation and gender identity will be asked this year in England and Wales, and in Scotland in 2022. </p>
<p>Yet, in general, a <a href="https://www.oecd-ilibrary.org/sites/dbbb7a05-en/index.html?itemId=/content/component/dbbb7a05-en">2019 report</a> noted only a few nationally representative surveys contained questions on LGBTIQ+ identity in the OECD, and none (at that stage) included them in the census. </p>
<h2>Why the census has failed us</h2>
<p>Determining whom and what is counted has always been part of census history — a history that has not always been neutral or fair. In fact, the census has often ignored or marginalised various communities for socio-political reasons. </p>
<p>For instance, <a href="https://guides.slv.vic.gov.au/earlycensus/history">while population counts began with colonisation around 1788</a> and the first census (as we know it, of people in dwellings) occurred in 1828, Aboriginal and Torres Strait Islander people were <a href="https://www.abs.gov.au/ausstats/abs%40.nsf/mediareleasesbyCatalogue/E31B62F372FC7BCECA2581320029DC01#:%7E:text=On%20Saturday%2027%20May%2C%20Australia,beginning%20with%20the%201971%20Census.">only fully included in the census in 1971</a>, almost two centuries later.</p>
<p>Longstanding structural racism and discrimination help explain the census’s historic incomplete data collection on First Nations people. Does the same hold true for the modern census’s approach to LGBTIQ+ communities? </p>
<p>Perhaps. Given there was strong evidence, arguments and testing around new questions on gender and sexuality in the census, it seems the ABS’s willful ignorance towards LGBTIQ+ people can only be justified by political conservatism and discrimination. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-time-to-talk-about-gay-reparations-and-how-they-can-rectify-past-persecutions-of-lgbtq-people-162086">It's time to talk about gay reparations and how they can rectify past persecutions of LGBTQ people</a>
</strong>
</em>
</p>
<hr>
<p>Although LGBTIQ+ people have more reason than most to be wary of the quantitative collection of sensitive data, it still desperately needs to be collected. </p>
<p>Inclusion of targeted questions on gender and sexuality also requires greater assurances around data integrity — a particular concern of older members of the LGBTIQ+ community who lived through the <a href="https://www.sbs.com.au/topics/pride/agenda/article/2016/08/12/definitive-timeline-lgbt-rights-australia">criminalisation of homosexuality</a>, <a href="https://theconversation.com/witch-hunts-and-surveillance-the-hidden-lives-of-queer-people-in-the-military-76156">lesbian witch hunts, surveillance</a> and <a href="https://qnews.com.au/australian-lgbtiq-history-timeline-the-20th-century/">other related trauma</a>.</p>
<p>Ultimately, not only is the lack of recognition <a href="https://www.smh.com.au/national/it-s-time-we-counted-census-makes-lgbtiq-people-invisible-20210805-p58fzx.html">distressing for many LGBTIQ+ people, it is also bad public policy</a>. Australia needs reliable, informed data on sex, sexual orientation and gender identity. Without it, the census is too risk-averse to even be accurate. </p>
<hr>
<p><em>This story has been updated to correct that the next US census is in 2030, not 2025.</em></p><img src="https://counter.theconversation.com/content/165800/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite the ABS itself saying that collecting data on LGBTIQ+ communities is of ‘national importance’, these questions have been left off the census again — for no good reason.Elise Stephenson, Postdoctoral Research Fellow of the Policy Innovation Hub, Griffith UniversityJack Hayes, Researcher, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1651622021-07-27T04:32:42Z2021-07-27T04:32:42ZWhat’s in the CPI and what does it actually measure?<figure><img src="https://images.theconversation.com/files/413251/original/file-20210727-26-wf8dtj.jpg?ixlib=rb-1.1.0&rect=233%2C239%2C3311%2C2017&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Nils Versemann/Shutterstock</span></span></figcaption></figure><p>So you don’t believe the official inflation figures. Why would you? They show prices climbing at an annual rate of <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">1.1%</a></p>
<p>On Wednesday the update for June quarter is likely to show prices climbing at an annual rate three times as high — somewhere between 3% and 4%, which will probably be another reason you won’t believe them.</p>
<p>(As it happens, most of the “jump” will be because of a different starting point. The 1.1% figure reports what happened after the three months to March 2020. The update will report what’s happened since the three months to June 2020, when coronavirus restrictions triggered a plunge in petrol prices and a temporary childcare subsidy cut the price of most care to <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2020/April/Coronavirus_response-Free_child_care">zero</a>.) </p>
<p>Most of us don’t believe 1.1% or anything like it because it doesn’t accord with our experience. We see petrol prices climbing. We are presented with bills for electricity, gas and rates we find hard to pay.</p>
<p>But here’s the thing. As hard to believe as we find it, electricity, gas and petrol don’t cost us that much over the course of a year.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/413241/original/file-20210727-23-wdsk04.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Petrol prices command attention.</span>
<span class="attribution"><span class="source">michaket/Shutterstock</span></span>
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</figure>
<p>We notice petrol prices because they are displayed clearly on well-lit signs of a specified size, as is required by law. We notice electricity bills because they are large and usually arrive only four times each year.</p>
<p>And because we don’t like them. We pay less attention to spending we like.</p>
<p>Every few years the Bureau of Statistics surveys 10,000 households to determine what they spent over the course of a <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/A192ADE3ACB05BE5CA2581B4000E490A/$File/hes%20diary.pdf">fortnight</a>, and for less frequent expenses over the course of a <a href="https://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/7E4BD0330493AFA9CA2581B4000E48CC/$File/hes%20and%20sih%20prompt%20cards.pdf">year</a>.</p>
<p>It uses what results to create a “<a href="https://www.abs.gov.au/statistics/economy/finance/household-expenditure-survey-australia-summary-results/latest-release">basket</a>” of representative goods and services, weighted according to actual expenditure. </p>
<p>Food accounts for the bulk of the basket — 17.3%. Alcohol accounts for another 5.3%. That’s right, 5.3%. </p>
<p>Compare the 5.3% of the basket we spend on alcohol to the 3.2% of it we spend on petrol, or the 3.8% on electricity and gas taken together.</p>
<h2>Alcohol and food big ticket items</h2>
<p>We spend almost as much on alcohol as on health, and more than on clothes.</p>
<p>If you reckon that’s not your household, fair enough. The basket represents the average household, as does the consumer price index <a href="https://www.abs.gov.au/websitedbs/D3310114.nsf/home/Consumer+Price+Index+FAQs">(CPI)</a> which measures the prices of the goods and services in the basket in the proportions they are in the basket. </p>
<p>And if your reckon you’d never admit to spending that much on alcohol, you’re also right. Alcohol and tobacco are two of the rare instances where the bureau <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/6461.0Main%20Features62016">nudges up</a> what people report to take account of what’s actually sold.</p>
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<p>Contrary to a widely-believed myth, the cost of housing is in the index, both in the form of rents and in the cost of building houses, rather than the cost of land (that’s regarded as an investment, as is the ownership of shares which are also not included in the index).</p>
<h2>Most things included, though not illegal drugs</h2>
<p>Some things aren’t the index but should be — superannuation management fees (the bureau is working on it) and recreational drugs and prostitution, which are excluded <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Products/6461.0%7E2011%7EMain+Features%7EChapter+5,Coverage+and+classifications">because</a> it is “very difficult and indeed dangerous to obtain estimates of prices and expenditures, or to measure quality change”.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=970&fit=crop&dpr=1 600w, https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=970&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=970&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1219&fit=crop&dpr=1 754w, https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1219&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/413273/original/file-20210727-22-1hql7ni.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1219&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Shrinkage makes comparisons difficult.</span>
</figcaption>
</figure>
<p>Quality matters. When Cadbury shrank its large blocks of chocolate from 250g to 200g a few years back and then to 180g, it wouldn’t have been right to merely record the price change.</p>
<p>The bureau adjusted up the recorded price to take account of the fact that people were getting less chocolate. But other changes are less straightforward. What do you do when VB reduces the strength of its beers (as it did) or the new model laptop has twice as much memory as the one it replaced?</p>
<p>For computers the bureau adjusts down the recorded prices of new models in line with a US formula.</p>
<p>For cars — which these days have features not previously dreamed of — it consults a <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Products/6461.0%7E2011%7EMain+Features%7EChapter+9,Quality+change+and+new+products">panel of experts</a>.</p>
<p>For other changes it lets improvements go through to the keeper, leaving recorded prices unadjusted even though the are getting better.</p>
<h2>Beneath the hood, the CPI is changing</h2>
<p>The bureau used to record prices using handheld devices in supermarkets and by ringing up suppliers and getting quotes. In the last few years it has moved to getting almost everything electronically — stores hand over data from checkout scanners, petrol stations report when prices have changed and upload sales data, and the bureau “scrapes” advertised prices from the web.</p>
<p>With those changes has come a revolution in what it is able to do. It used to collect prices in only a small number of representative outlets (which is why the index was limited to capital cities) and it used to record only the prices of “<a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6403.0.55.001June%202011?OpenDocument">representative</a>” items. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=967&fit=crop&dpr=1 600w, https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=967&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=967&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1215&fit=crop&dpr=1 754w, https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1215&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/413244/original/file-20210727-17-1pihi03.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1215&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The stand-in for bread was a sliced white loaf.</span>
</figcaption>
</figure>
<p>The stand-in for bread was the average price of a sliced white 650-750g loaf.</p>
<p>Better still, for the first time the bureau has information on how much is bought of each product at each price each quarter. This enables it make real-time adjustments to weightings in accordance with actual behaviour.</p>
<p>In 2011 when Cyclone Yasi destroyed banana crops in Queensland, the price of “fruit” recorded in the consumer price index surged to an unprecedented high. But the prices actually paid for fruit didn’t surge. Shoppers bought other fruits or canned fruit instead.</p>
<p>Next time that happens the CPI will scarcely move.</p>
<p>It’s making the index more of a cost of living index and less of a “cost of a fixed basket” index. It is happening for petrol too. The bureau is reporting the prices people actually pay, instead of the prices on offer.</p>
<p>None of this is to say that the CPI is perfect, but it would be wise to take the figure to be released on Wednesday seriously. It probably does a better job of recording changes in our cost of living than we’d do ourselves.</p><img src="https://counter.theconversation.com/content/165162/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This story is part of a series on financial and economic literacy funded by Ecstra Foundation.</span></em></p>We spend more on alcohol than we’ll admit, less on electricity and gas combined than we think.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.