Ideas@TheCentre – The Centre for Independent Studies

Ideas@TheCentre

Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Rich get richer while poor get … richer

Robert Carling

29 June 2018 | Ideas@TheCentre

One of the striking results of the survey of millennials released by the CIS last week was that 62% of respondents agreed with the proposition that “ordinary workers in Australia are worse off now than they were forty years ago”. This is so far from the statistical truth that one must wonder what notion of “worse off” those 62% had in mind.

Average weekly earnings of adult full-time workers is not available as a consistent series over 40 years, but we can go back 36 years. Over that period, average weekly earnings rose 45% in real (inflation-adjusted) terms.

A broader measure of people’s living standards is represented by household disposable income per capita, which is available for 40 years. On this measure, there was an increase in real terms of 65% from March 1978 to March 2018. This is a remarkable advance in households’ economic well-being.

The comeback from doubters might be that those figures only measure the average experience and that all the gains have gone to the better-off and none to the worse-off or to ordinary workers. By chance, last week the Australian Bureau of Statistics released new data that shed light on this distributional issue.

Once again, we don’t have consistent 40-year data, but we can look at what happened from 2003-04 to 2015-16. In those 12 years, real household disposable income increased on average by 45%. All household quintiles experienced increases above 40%, but the largest (61%) went to the poorest quintile while for the second poorest the increase was 49%. It is also true that the richest quintile gained 56%, but these figures surely demonstrate that while the rich got richer, so did the less well-off segments of the population.

There is always room for debate about whether policies need to be tilted more in favour of the less well-off. But it is helpful to start from a shared knowledge of the facts.

New tax won’t rain on consumers’ parade

Eugenie Joseph

29 June 2018 | Ideas@TheCentre

This Sunday will see the long-awaited introduction of the GST on overseas goods priced under $1000, intended to even the playing field for local retailers. Starting on 1 July, GST will apply to things like the books we buy from Book Depository, clothes from ASOS and anything from overseas sellers on eBay.

While Australians may feel miffed about paying an extra 10%, in reality it will do little to claw back the enormous benefits that consumers reap from online shopping and competition from overseas retailers. As the Productivity Commission has noted, the price differential between local and overseas goods is often much more than 10%.

If anything, this is a good time to reflect on how much Australians have gained from vigorous retail competition in the past 20 years, which has led to price deflation across many goods.

The Australian Bureau of Statistics has re-weighed the different components of the consumer price index (CPI). Consequently, goods like clothing, furniture and household equipment now represent a smaller share of a household ‘basket of goods’ used to calculate CPI.

In other words, the ABS recognises that households are now spending less of their budget on retail goods. And we can thank the internet and overseas retailers for that.

Importantly, low-income households benefit most from price competition, as they need to spend a higher proportion of their disposable incomes on household goods.

Online shopping has even allowed consumers to bypass antiquated and protectionist policies, like our laws that prevent Australian booksellers from importing cheap editions from overseas.

Despite this happy story, we cannot ignore that the ABS has also increased the CPI weighting of services like health and child care. In other words, consumers are now using more of their disposable incomes to pay for these services.

This is not necessarily a bad thing, except these services tend to be highly regulated and not subject to adequate price competition.

We can only hope they will become the next battleground for real competition.

 

CIS poll no surprise to Unlearn-U student

John-Paul Baladi

29 June 2018 | Ideas@TheCentre

The Centre for Independent Studies/YouGov poll released last week rightly gained national attention for highlighting the negative effect left-leaning universities are having on historically ignorant millennials.

The poll found 58% of Australian millennials hold a favourable view of socialism. This finding might astonish those who were old enough to see the Berlin wall come down.

However, to a politically conscious student at the University of Sydney, it is unsurprising. I am all too familiar with the far-left activism embedded within the education system.

From junior high school through to the HSC and on to university, social science and humanities teachers and academics bombard students with criticisms of western culture, from colonialism to orientalism, to the White Australia policy.

This kind of identity politics is thinly disguised as ‘compassion’ for the excluded and oppressed.

Yet while students are taught about the flaws and failures of western culture under the rubric of intellectual freedom and ‘balance’, uttering fair criticisms of Islamic teachings and history, or highlighting systemic issues in Indigenous communities, is considered bigotry.

And it’s not only high school and university syllabuses that are skewed to the left side of politics. In my experience, the teachers, tutors, and lecturers — whose role is to enlighten our generation — are sometimes further left-leaning than the syllabus.

I’ve heard a tutor explain that conservative political parties only exist to defend the “aristocracy” and another claim the Australian Greens weren’t “radical enough”.

The recent open letter signed by more than 100 Sydney University academics — which was redolent of Marxist analysis and identity politics clichés — rejected the Ramsey Centre’s proposed degree in Western Civilization on the grounds that this would violate “the standing norms of academic independence.”

But when most of the humanities faculties lean left, and some academics are openly hostile to Western Civilisation, talk of academic independence rings hollow.

John-Paul Baladi is an intern in the Culture, Prosperity and Civil Society Program at the CIS.