Who's excited about their 5.75% payrise?
Doesn't cover the fact that my favourite frankfurts have gone up by at least 50c at Aldi (still @ $2.50 cheaper than Colesworth).
Not to mention KFC price rises, Guzman, Maccas etc
Who's Excited about Their 5.75% Payrise?
Comments
Thank you, I initially didn't put a link in (I couldn't contain my excitement). :)
The issue is inflation has already outpaced a 5% pay rise, you would honestly need at least a 10-12.5% pay rise excluding the increase cost in rent if you're renting.
Government has also increased land taxes and calculation methods for landlords so either they will raise the rents more if they can if market permits or simply make their properties airbnb.
Literally a bandaid patch for a centrally caused problem they have no way of fixing now.
RBA needs to stop messing around and pump up rates to 10%.
@drfuzzy: Rents are not correlated with interest rates.
That line is frequently spouted by people who have no fundamental understanding of economics and is pure copium.
But sure, let’s jack up rents too. I mean, with immigration increasing there’s no doubt rents will go up. Anyone who wants immigration to stay low but their property to increase in value and rents to go up is suffering from some hardcore cognitive dissonance.
@Ghost47: Supply and demand impacts rent a lot, but given that supply is low at the moment, and the rising interest rates impact the people holding the mortgage, there is a push to recoup some of the increases expenses through an increase in rent.
@sashatheman: That’s just because vacancy rates are tight. If there was no immigration landlords wouldn’t be able to raise rents much.
@Omarko: Not joking to be honest and that’s coming from the view that if I become unemployed then I become unemployed.
We’ve had it far too good for far too long, living in a world where recessions don’t exist and it’s constant good times. That’s not how the world works and the longer we go without a recession the deeper and longer it will be when it happens.
The govt needs to stop pouring fuel on the fire and amping up immigration to 11 during all this. People can't even find rentals so what do they do? Issue millions of visas and build a token amount of social housing (which equates to mere minutes of supply) to make it look like they are actually doing something.
Then the property groups turn around and say it's a supply problem. It's actually a demand problem. The cost of one of the 3 basic human needs is going to continue to skyrocket. I say this as a homeowner, who isn't silly enough to think their solitary PPOR is making them "healthy", far from it.
I worry for the future my child needs to live in.
@Bluto Mindpretzel: This. Government ramping up immigration at the present time is insanity but everyone loves Albo so he gets away with it.
We were never asked.
@Bluto Mindpretzel: You can’t really just blame the government. Anyone who owns a property or an investment property who cares about the value going up — even when they can’t actually realise that value without either taking out the equity and therefore have a loan to pay back, or sell the place and therefore incur large transaction costs because property is a crap investment overall — deserves to be blamed for what’s happening.
It’s your fellow Aussie who is addicted to bricks and mortar who should be blamed.
https://www.afr.com/work-and-careers/workplace/lowest-paid-g…
And wage increases to probably cause 2 more rate rises. Bravo.
What do I buy for Gerry now with this? Dog or horse food?
Horse Food, so they don't end up in the Glue Factory.
I heard they are soon to be stocking Soylent Green.
Our local store has started to sell toilets. I feel like feeding them homeless folks dates and fige with some booze as long as they walk in there and test them cans with their bowels.
Excited or not, it will just feed the inflation animal.
That's the worst part, the RBA will use this to justify a rise in Interest rates, yet again.
So they should. I hope they smash inflation back to 2%
You realise a large component of inflation is rents? Which increase every time the rate rises? Which increase inflation? Which causes them to raise rates? Then go back to the start and repeat.
Housing is the highest weighted group in the CPI, accounting for around one quarter of the basket. It includes new dwellings purchased by owner occupiers (houses, townhouses and apartments), rents and major renovations.
Finding information is hard.
Which increase every time the rate rises?
is this also a fact? I'm lazy, I can count on you to find the answer :)
is this also a fact? I'm lazy, I can count on you to find the answer :)
Not lazy, just dense.
@cloudy: Perhaps have a look at the increase in rates, and compare it with the increase in rents. Or don't, if it's too hard.
Perhaps have a look at the increase in rates, and compare it with the increase in rents. Or don't, if it's too hard.
ok, so this is how you do it.
Lets see.
Oct 1990 IR was 14%, today it's roughly 4%.
So you're suggesting rents should be much much lower today than in 1990 right?
If that's how you want to look at.
I'm just asking you, since you're not the "dense" one. You're the factual one.
All good, you go ahead and conflate the situation we have currently, with 1994.
Not trying to conflate anything. You come with statements of fact, and im trying to ascertain if they are, even when insulted I feel like I've been quite civil in asking reasonable questions.
Oct 1990 IR was 14%, today it's roughly 4%.
Oh sod off mate. Are you a boomer? because that's the line that boomers LOVE to bring out at family events.
"When I was young interest rates were 14% and I bought a house!"
Yeah the ratio of the house to your salary was also a fraction of what it is now and you got a job at the job factory down the road where they were handing out jobs where a SINGLE salary could support an entire family including a stay at home mother.
Oh sod off mate. Are you a boomer?
no, I'm just inquiring and expanding my knowledge while i play OW.
He did say IR and rents go in line, so i thought i'd ask how i could test it, and he told me to look at their relationship, so i have.
Why the hate?
Why the hate?
The presumption is that you're not commenting in good faith.
He did say IR and rents go in line, so i thought i'd ask how i could test it, and he told me to look at their relationship, so i have.
You're looking at the relationship the wrong way. Interest rate changes do not directly influence rents as your comments seem to be implying, otherwise yes we'd be looking at rents less than the 1990s when interest rates were 14%.
However, when interest rates (and thus mortgage rates) increase, rents do increase as the landlords need to recoup the increased repayments via increased rent. Much like how the shops have increased prices to recoup increased costs like freight.
The way you're commenting sounds like you'd expect rents to go down if interest rates go down… good luck!
@Chandler: Rents go up/down due to supply and demand
Greedy Landlords will increase rent if they can irrespective of interest rate
Whinging renters will also refuse to pay the increased rent if they can get a better deal
He did say IR and rents go in line,
No, he said inflation and rents are linked, not interest rates.
@brad1-8tsi: Read what he said - he referred to rates specifically.
Man paopoe be dense.
(Mods if you delete tgis then delete every other "insult" in this thread)
@cloudy: Never said it was a 1:1 relationship. You seem to be trying to pick flaws by intentionally misinterpreting a statement to be more specific than it is.
The relationship between rent and inflation is well described on the ABS website
The relationship between inflation and interest rates is described on the RBA website.
These are common concepts taught in economics, however it's easy to forget that economics is not taught to most students - people forget it isn't common knowledge.
@greatlamp: I’m just looking at the data, any relationship should manifest in the data as my less dense one told me.
Even if you don’t like looking back in history look at the last 5 years or 10. Bar the last 12mobths IR has had a consistent downtrend. Rents has not, the only year rents and IR has gone in sync is the last year. But guess what. So has the price of everything, everything’s up.
@cloudy: You are correct, rent and interest rates have independent market pressures. You should have just said what your thoughts are.
@brendanm: And the beauty of whole thing is as my rent goes up, i have less to spend with businesses whos rents/repayments are also going up at the same time. :)
@brendanm: Labor and Greens are working to cap rents. So, this pro-worker party coalition will lower inflation.
@brendanm: Yeah, I know, right. They spent past 30 years causing a massive housing ponzi crisis with their idiotic market interventions in order to "boost supply".
@brendanm: Yep, remove negative gearing, reduce immigration, build houses, etc and start building up Australia instead of propping up the rich. Lots of room in Australia but government needs to do their damn job of building infrastructure
@brendanm: not if people feel the crunch and then move in together, thus increasing supply of available housing.
@brendanm: You're looking at a small part of a longer chain. The cause of inflation is growing the amount of currency representing the value of the country's goods and services. The currency is inflating because the supply is growing. The main reason the supply grows is via the banking infrastructure around fractional lending like mortgages, and by more direct money printing eg QE.
Really, armed with this knowledge, you can see that the moment the gov + RBA decided to print and spend hundreds of billions during covid, and lower the interest rates to 0, triggered an enormous money printing frenzy, and the effects of that currency-devaluing period are still "shaking out" now. There is no solution for it, we just have to wait for it to normalize while different areas of the economy (different people) fight over who shoulders more or less of that burden.
@ssfps: I've already said this a million times on here. The government and rba have caused this by giving away so much free and cheap money. They then continue to make it worse by giving away more free money, or more money for same work output.
@brendanm: So, it's okey to inflate house prices with no correlation to inflation? It's not hard, not to overextended and buy homes with 2% deposit.
If landlord plans well, rents wouldn't have increased like this..which won't flow into inflation.
@CrypticM: Not sure exactly what you are saying, however, like every investment or business, the investor/business owner will pass along cost increases if they can. They aren't charities.
@brendanm: It's more like ' they have to ' rather than ' they can'. If they have healthy LMI,( and not ovelevaged to b**ls) they wouldn't have to increase rents every 6 months . Rates will come down in 12 months… Do you expect them to cut rents? No…it's permanently seeped into system.
@CrypticM: The point still stands, costs go up, price of end product goes up. Even if they are in a great position, why eat into your profits if you don't have to, it's not a charity. All the people suggesting they just take the loss are welcome to take people I to their own homes for free. But they won't, because talk is cheap.
Do you expect them to cut rents?
No, because the twits in government are hell bent on importing a metric shitload of people while we have a complete lack of housing and infrastructure.
@CrypticM: Inflating house prices does cause inflation, the points mentioned above cheap money (low interest rates) and fractional lending by banks both increase the money supply, in fact they increase the money supply multiple times more than the money paid out by government (which everyone focuses on).
Low interest rates during COVID encouraged many asset rich older gen to downsize and move to rural/coastal areas. This took supply away from rental markets and added millions to the economy.
There were global shortages of building materials because of the pace of the housing boom in several countries.
The only way inflation will get this low again is if Putin dies a sudden, horrific, painful death, then whoever takes over withdraws from the Ukraine, and a treaty is signed.
@BewareOfThe Dog: You've gotta be kidding. Next do the line about global warming causing auspost deliveries to run late.
Spoken like a true socialist who has no idea about how the economy operates
More importantly, beware the law of unintended consequences. The employees this pay rise is intended to help will ultimately hurting them more. Employers are just gonna hire less people. Machines and AI might end up becoming more attractive. With automation, there's no need to pay super, payroll tax, work cover premiums, annual leave, long service leave, sick leave, carers leave, fringe benefits, fringe benefits tax, worry about wage underpayment…
So if you think about it, blanket pay increase of 5.75% for the masses (instead of letting individuals seek the best price for their labour in the market) is likely to fuel inflation further, encourage RBA to increase interest rates further, result in higher unemployment… and we're back to square one, except now price levels have been moved higher.
The nations that are doing the opposite to that, are suffering more than Australians. It's not a one-off cherry picked data. There's mounting historical data to show.
Nations (or more importantly the cities) where you have a social safety-net like in Northern Europe, Australia, New Zealand, and certain East Asian nations, tend to do much better than our cousins in Canada, USA, Israel, South Africa, and certain East Asian nations. But there are a lot of other factors to consider, so it is not a 1:1 relationship.
RBA is doing what it is supposed to do. Can't blame them. It's the government ( past and present) who messed up economy.
Please RBA raise, raise, raise interest rates. Surely I can't be the only one who wants to see some blood in the streets. It's all too big to fail now and this Ponzi economy we have created will never truly crash until world war 3 but I still want to see at least a little blood in the streets.
Seriously? You want ppl to suffer? Lose their homes?
Wow…
@Omarko: You'd rather them both work full-time jobs because they have to, have kids they never see in daycare, commute 3 hours a day, take out bank loans to pay off in 30 years and keep making a small percentage of the population rich? Plus you want their children to grow up in an even more impossible and unequal society. If people now are finding it difficult or impossible to buy a home what about their kids? I have no sympathy for people with multiple investment properties, those living beyond their means or just general greedy people who find themselves up the creek because the risk they took didn't pay off.
Can you explain why?
Simple mathematics says no, but i guess that's why I'm not an accountant or economist.
If inflation is at say 6.8%, and you get a pay rise of 5.75%, then you can afford less for the following year, this suggests it should be deflationary.
If you got a 6.8% pay rise that would be maintaining inflation steady. No?
If I have this wrong, can you pick the percentage pay rise that it would flip from feeding inflation to reducing inflation? And explain the maths?
Trying to match inflation with wage rises only fuels inflation further. But Albo and Chalmers will lead you to believe otherwise. They're only intent on maximising the damage during their one-term reign. And don't get me started on Bowen who's living with the fairies.
"during their one-term reign". I so wish you were right, but I fear the ALP will be running the country for the rest of eternity. The LNP is decimated; the ALP's only threat are the Greenies.
The ALP's solution is always: tax cuts for the rich, build more windmills, flood the country with gimmegrants. They are ruining the country.
@MandMs13
…? Did you read my question? Or were you intending to reply to someone else? You just repeated the same basic premise Ocker (OP) said above, and did not address anything in my post.
I'm guessing your reply was meant for someone else in the thread..?
To answer your question, Inflation and payraise are not related concept.
For example, 5% Inflation means $100 apple become $105 apple. The price of apple changed (inflated), but the actual value of apple did not change. One apple is still one apple.Inflation actually means that one dollar worth less now (think of foreign currency latest, but in this case, dollar against apple)
And let's say your wage is $100, and you cant afford to buy a $105 apple.
But now you (and everyone) just got 5percent raise and now you earn $105 and should be afford that $105 apple… Right?Unfortunately, because everyone get that 5% raise, there are more money in the country (or "the market").
The production of apple did not increase 5%, and now there are significantly more money than apple.
This imbalance between the supply (same no. Of apple) and demand (more money) trigger vicious cycle of inflation.
To counteract economic inflation, you need to take money from people (tax and increasing RBA rates) and stop pouring money to the nation (reducing government spending, including welfare, medicare, essential services like military, police, fire fighters…)
And increasing payrate is wrong move that is opposite to economic textbook. However government does it because 1. Actual ppl suffer and this is what they can do immediately. 2 they do not want to lose vote.Pay raise at this point is definitely economically shortsighted move, which will provide short-term relief for people.
@skhun: Okay, so if everyone gets a pay rise to $104, but the price of an apple goes up to $105, what happens to the demand for apples if no one can afford one anymore?
Also if everyone's pay goes up to 105, the number of apples has not changed, neither has the number of people that can afford an apple. Demand stays the same, supply stays the same. The amount of money has not changed. It seems like it has, because the number went up, but if EVERYTHING else (apples in this case) went up EXACTLY the same amount, then there is no difference.
The way I see it:
Say you have:
Population: 10 people
Each earning: $100
Apple costs: $100
Therefore, the entire population can buy 1 apple each, assuming supply is meeting demand 1:1 before we startThen inflation comes:
Population: 10 people:
Each earning: $105
Apple closts $105
Therefore, the entire population can buy 1 apple each, no change in demand, and we are assuming supply has not changed either.@Kkuba: Yep that tracks until your people start noticing the apple to oranges gap is larger now and 10% of people decide they can save $5 switching to oranges.
@Kkuba: You might be right, but not applicable in real life for many reasons.
1. The population is growing exponentially and so does the demand
2. Your thought might be correct (or may be not) only if the economy was isolated, in real life there are multiple countries.
3. Tax implication. Companies might benefit by selling my product overseas even selling at lower price.Most importantly, if apple becomes 105 and people cannot afford because they only have 104, people either buy together and share or loan the money to others and take interest.
Before you give your opinion back, these are not my opinions. These are from text books, which you can find online as well. Any further questions, please search on google or youtube.
Giving a 5.75% wage rise for low income earners is bad for inflation as they typically spend every cent.
Giving a 5.75% wage rise for high income earners is better for inflation as they tend to save it which is less inflationary than spending.You'll be happy that the stage 3 cuts will give precisely that.
Also, your logic is quite flawed. The low-income might spend all their money, but VERY little of it goes to luxuries. The high-income earners are those that can reduce their spending. This increase is because current inflation makes the current minimum wage practically unlivable.
No, it's better for the economy if money circulates. It isn't better for inflation, money invested doesn't decrease inflation.
This isn't a wage rise for everyone. It's a wage rise for those on minimum wage, those that are feeling the crunch the most from CPI rises. The government still needs to help those most in need.
Everything feeds inflation. We can't just go to a stand still and wait it out when it's not wholly an Australian caused issue and has plenty of international causes. Do you expect them to starve? I'd much prefer I have to tighten my belt, then watch as people making 850 a week paying 450 a week in rent go without.
This is strange, as the people getting the benefit from this are those who would spend 95% of their money on necessities and can't really spend less. Do they want them to start starving themselves?
Maybe that can for the first few months, but inflation is always higher than minimum wage increase. Because if minimum wage increase by 5.2 percent, all the other people has ground to ask for 5.2 or more % raise. Some success some don't, but eventually the market will have much more than the sum of the 5.2% minimum wage increase, which cause higher inflation and starts the viscous circle
KFC price rises, Guzman, Maccas etc
<tiny violin plays a weeping concerto for OP>
This is a well known gripe. I assume you earn more than 50k a year, and don't work for 4 different Employers.
Doesn't affect me but it does my wife, so I guess I'm excited?
Yeah, maternity leave!
Reserve bank rubbing their hands with that interest rate rise lever that they'll have to pull on Tuesday.
The problem with these RBA rises is that they're going at 0.25 percent a meeting. So yes it's slowly rising but it's been gradual so the effect is dampened.
If they did it in a sudden manner for example the same amount of interest rate rises but over only 1 or 2 meetings the raises would have more effect.
If they increase it 1-2 percent a meeting but leaving the others flat would be more effective I would think.
It is too much . Should have been no more than 4% . This will add to inflationary pressure.
Stupid, evil poor people! Always ruining everything!
Did you even read what was written?
It's well established that the poor spending money to survive isn't the driver of inflation. Think about the magnitude of their spending, it's a tiny amount in proportion to the economy.
It's a intentionally false understanding of economics oven shared on right wing media
Just in case people were wondering…
https://www.abc.net.au/news/2023-06-02/minimum-wage-increase…