Economic Inequality and the ‘Cost of Living’ Crisis

Abstract

The cost of living crisis is a major social and economic issue that impacts many Australians. Politicians frequently speak about this crisis in relation to the rapidly increasing prices for petrol, housing and groceries. However, political action is limited to minor financial supports that help people negotiate costs in the short term. This chapter analyses how the cost of living crisis, which is often portrayed as an issue for individual consumers, is deeply connected to escalating income and wealth inequality in Australia. Governments have been reluctant to address this deeper issue. Drawing on Australian-based research, I highlight how escalating economic inequality is a direct result of Australian government policy, which has contributed to the cost of living pressure for many. Successive governments have sought to reduce taxation and labour costs incurred by capital in Australia. Taxation reforms have preferenced high income earners and capital, and reforms to industrial relations have weakened labour power, facilitating the fragmentation of workforces and weakening income growth. Consequently, capital has captured a growing proportion of profit generated in Australia.