Australia: the land of the rip-off?

A new report has identified Australia as an astonishingly expensive to live, and blames the government in many cases for making it unaffordable.

According to the Centre for Independent Studies’ Price Drivers report, Australia has become one of the most expensive countries in the world across the domestic, retail and commercial sectors.

The shopping and consumer experience is highlighted as an expensive one. Sydney is shown to be more expensive for parking than London, New York, LA and Stockholm. Cinema tickets are traditionally higher compared to other countries. For average consumables, meanwhile, it makes economic sense in many cases (books, DVDs, electronics) for Australians to import them in.

The price of a small sample of goods, including a chart music CD, white goods, electronic products, clothing, and furniture, was compared to the US, Canada, Japan and Germany. Australia ranked second in expensiveness to Japan, and more than twice as expensive as the US.

Australian consumers are often unaware of the scale of the price differences on various products that, even during trips overseas, they would not otherwise purchase. The report has called for import restrictions to be dropped on items like bananas, books, DVDs, and cars.

Cars, according to a sample in the report, are currently between 33% and 45% higher than the European average. The market would see a considerable change if import duty and restrictions on used vehicle imports were removed, it suggests.

Problems are attributed to a spiral of high costs that rotate into the retail cycle. Rents are particularly high, particularly for retail space, while the Australian minimum wage is much higher than many other countries. As such, price is not a straightforward indication of the standard of living, but affordability is a concern for many Australians. The report identifies rent reduction as a necessity to make shopping more affordable, particularly with the ease of credit card shopping online.

For residential, however, it suggests that 'benign' government intervention in the form of first-home owners grants has had ‘pernicious effects on housing affordability’. This has pushed up demand for a limited supply of housing, thus driving up house prices. A comparison of stamp duty shows this also to be much higher in Australia than in countries like the UK or Canada.

Are shopping and the cost of living now unaffordable in Australia? Do you benefit from reward credit cards or ordering items offshore? What would your recommendations be to remedy the problem? Let us know here at Which4U.

Keith McDonald
Which4U Editor