Since the mid 2000's the cost of living has ballooned dramatically in Australia as house prices and housing rentals have moved upwards towards unsustainable levels, this is especially so in Perth. Many people have attributed this to the Mining boom and the impact new workers have had on supply and demand in these regions. Unfortunately that is an ignorant view.
The responsibility for the cost of living sits squarely with the State and Federal Governments and their inability to take responsibility for the countries growth. These levels of Government have a preference for allowing Corporations to dictate what occurs and what is invested in within Australia. Corporations have a shareholder profit view in regards to their decision making and have no interest in subsidizing the communities needs, as this detrimental to the Corporations own growth and performance targets for directors.
This is primarily the case in land release programmes in which the Government's trickle releases land to developers who then trickle release land to buyers. This trickle approach is designed to maintain the level of value within the market and not over-supply the country. Failing to undertake this approach would result in supply affecting the value and asset depreciation and associated negative events as mortgages became inflated. This is argued to be an important part of Good Governance, "The awareness of the impact of land releases on housing values", however there is one thing the Government has overlooked; "Land supply is the lubricant for the economy." This is absolutist and no amount of argument can provide a differing view.
The cost of land and the cost of housing affects ALL economies and all sectors of the economy and this trickle effect creates an unsustainable growth model which will eventually lead to a negative growth rate. The alternative view is that the Government provides mass amounts of Government housing Ala Singapore's HDB apartment system and those who achieve certain income levels are free to purchase free-hold land. Unfortunately Australia now lacks the resources to even embark on that type of programme without occurring a large level of foreign debt. (Something Corporations frown on).
It is important to understand the actual costs that this approach creates. Below are a number of simple examples and their required accounting from a wide range of industries looking at both mortgage and rental angles. A town contains 10 houses available for rent. The coffee shop owner rents the house and uses his income from the sale of coffee to pay for the rent. Suddenly there is an influx of migrants to the town who wish to rent. When the lease is reviewed the house owner puts the price up. This price is then matched a migrant. The coffee shop owner must then pay more rent or find somewhere else. In order to pay for rent the coffee shop owner uses a greater % of his disposable income. In order to increase the remaining % from his income the coffee shop increases his prices by $1, from $4 to $5.
Unbeknownst to the coffee shop owner, a number of his regular customers are in a similar situation but are unable to increase their income level. In order to maintain the same level of available income they prioritize their costs. They reduce their coffee intake to 3 from 5 days. At the $4 level the regular customers were buying 250 cups of coffee a year (50 weeks) and spending roughly $1000. At $5 a coffee the regular customers were buying 150 cups of coffee a year (50 weeks) and spending roughly $750. This is a reduction of $250 and requires the coffee shop owner to reduce other staffs shifts in order to yet again maintain his level of income. By reducing the shift of staff, those staff must also reduce their spending in order too pay their rent and this process is repeated at the Vegetable store. This cycle is repeated over and over. Alternatively the Government could release a % of land to private builders and increase the supply thus reducing the migrants impact on the community.
To be continued
Paragraphs/topics to be covered
Short-term departures by citizens
expenditure in foreign destinations
failure to allow an increase in relationship/entertainment venues
failure to streamline transport
