In November of 2023 it was reported that Australians had suffered “the largest fall in living standards of any advanced economy” for the 2022-23 financial year, with household incomes falling 5.1%. These are the lowest figures seen since June of 2019 and are reportedly the result of high inflation, increasing mortgage repayments and rising income taxes.
This decline in real incomes for Australia is in contrast to the wider OECD, which saw living standards increase 2.6% on average. The United States and United Kingdom saw disposable incomes grow by 3.5% and 2.2% respectively over the same period, whereas
Australia saw the very worst of recorded declines, alongside Norway (-4.4%), Sweden (-3.1%) and Ireland (-2.8%). Furthermore, Australian real household incomes are now recorded to be only 18% higher than in 2007. This is in comparison to the 22% seen across the OECD as a whole.
Carlos Caho, Chief Economist for Jarden Group, described Australian households as suffering from a “perfect storm” of factors leading to poorer outcomes than other OECD nations: a property market dominated by variable rate borrowers, consistently high inflation and accelerating population growth. Mr. Caho also highlighted tax bracket creep as a contributor:
“Bracket creep is also definitely a factor in Australia. A combination of strong nominal gross income growth and the non-indexation of tax brackets means the rise in tax paid is above our global peers.”
A spokesman for Treasurer, Jim Chalmers, defended the federal government’s economic management, highlighting the billions of dollars in cost-of-living relief, and stated that:
“The ABS has confirmed that without our cost-of-living plan, inflation would be half a percentage point higher.”
Opposition Minister for Finance, Jane Hume, stated that Australians were suffering due to the government’s lack of planning:
“With inflation forecast to stay higher for longer, interest rates rising, and real wages going backwards, it’s clear that Australians are paying the price for Labor’s lack of a plan in this crisis.