The Guardian • Issue #2079

Cost of living crisis

That’s capitalism, baby

  • The Guardian
  • Issue #2079

One of the biggest issues facing households is the cost of living crisis and the failure of governments to take action to ease the situation. The large corporations that control prices and availability of goods and services are using their industry domination and monopoly power to increase prices with devastating consequences.

The latest blow is the Reserve Bank of Australia’s (RBA) hike in interest rates – up another 0.25 per percent to 4.35 per cent – the 13th rise since May 2022. The Big Four banks wasted no time passing on the full increase to borrowers.

The impact is huge. For example, repayments on a typical loan of $750,000 in the major cities have risen over that period by around $1800 a month, and on a $1 million loan – not uncommon – the increase is around $2,400.

All four banks posted record profits in 2022-23 with combined profits of $32.46 billion. These profits are mainly the result of not passing on the full increase in interest rates to those with deposits. The gap between interest paid on deposits and interest charged on loans – interest rate margin – is one of the main sources of these profits.

The federal government could act to reduce the monopoly power of the Big Four by establishing a publicly owned bank with a strong social charter that puts people’s interests first.

Judging by the RBA’s statement, there is more pain to come for mortgagees and tenants whose landlords pass on their additional costs.


Hundreds of thousands of people are increasingly finding it difficult to repay mortgages or find rental accommodation let alone accommodation that is affordable. Older women are increasingly becoming homeless.

State governments still continue to sell off public housing or leave it vacant while failing to carry out the necessary maintenance.

The private sector has failed dismally. All three levels of government should step in and build affordable, public rental accommodation where it is needed.

The Australian Bureau of Statistics reports that up to 136,000 dwellings are left vacant, and the spread of Airbnb and other similar operations are robbing the rental market of housing.

Residential dwellings have become a commodity for wealthy investors; they should be homes.


An Australian Council of Social Service survey released last month found that the majority of people on income support struggle to cover their energy bills and are running out of options. Of the 427 people surveyed:

  • 74% are cutting back on cooling and heating
  • 62% are cutting back further on use of lights
  • 55% are taking fewer hot showers
  • 51% are changing how they cook meals (i.e. not using the oven)
  • 49% are going to bed early to keep warm or cut down their use of lights
  • 33% have stopped having people over.

With rental accommodation running at $600- $700 or more per week, how can anyone on the minimum wage of $882.80 afford to rent? Governments could put a cap on rental increases and take other measures to protect tenants, as well build more rental accommodation.

The punitive Jobseeker payment of $374.60 per week means there is no rental accommodation for the unemployed. No wonder the various charities are reporting record requests for food, power bills, and other assistance. The various rates for youth allowance are similarly disgraceful, especially for such a rich country as Australia, and for a government willing to spend $368 billion plus on nuclear submarines.

The age pension is also inadequate at a maximum rate of $500.25 a week or $755.70 for a couple, in particular for retirees who do not own their own home.

The government could and must increase these payments so that recipients can live a life with dignity and meet their basic needs.

Wages continue to lag price rises. In 2022 wages rose 3.3 per cent compared with inflation of 7.8 per cent – a real wage reduction of 4.5 per cent. Prices continue to rise but real wages have not caught up.


Coles and Woolworths hold retail power with relatively little competition from other retailers. Last year they made record profits of over $1 billion each as households were drowning in rising prices and struggling to put food on the table. They are a major contributor to the current cost of living crisis and rising level of poverty.

The protest group, Grassroots Action Network Tasmania, or GRANT, placed false tags on the shelves in Woolworths and Coles that said it all. “Our right to profit is more important than your right to food. That’s capitalism, baby,” the Coles tag said. “We’ve made over $1 billion in profits whilst you can’t afford bread,” ran a tag placed in Woolworths.

Hundreds of thousands of people are experiencing food insecurity. The government should act to impose price controls.


Gas, electricity and petrol prices continue to rise. Three major corporations dominate the market in Australia:

Origin Energy in electricity generation, natural gas production, and retailing with around 27 per cent of the retail energy market share.

AGL, with the second largest, coal, gas and renewable energy sources has around 22 per cent of the retail market.

EnergyAustralia has power stations and around 15 per cent of the retail market.

These companies exploit their domination of the energy sector to inflict monopoly pricing on their customers.

The government could and should step in and implement price controls and nationalise the sector in Australia. These companies were previously state-owned.


Freezes in Medicare rebates by successive governments means the system of bulk billing is in crisis. Patients are now being left $40, $60, $100 or more out of pocket for a GP consultation. Specialists are even more inaccessible as they charge large fees and patients are left with a huge gap payment.

Health care has become a for-profit commodity. The government must increase rebates to a level where GPs and specialists are in a position to bulk bill patients. They should also offer GPs the option of being salaried without fee-for-service.


The many reforms that are required to address the cost of living crisis will not happen by chance. The many vested interests will fight tooth and nail to hold onto their private, profit-churning, and monopoly powers.

Only under socialism can these issues be fully addressed on a permanent basis. In the meantime, trade unions, community organisations, and individuals in united action can bring about changes.

For trade unions to exert their full potential in struggle the restrictive industrial relations legislation must be repealed. Above all the right to strike must be legalised and employer lockouts outlawed.

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