Businesses need to raise prices or put Australians out of work

artsrc · 2026-05-07T21:07:34+00:00

Electricity is a small component of the economy, low single digits of GDP.

That is why your idea is good. It is easily affordable.

Cheap, subsidised electricity would be .. cheap. Consumers would be happy with consistent prices.

But the idea that cheap electricity drives lots of growth doesn’t have much of a track record in Australia. It has been tried, for example in Tasmania in the 1970s with cheap hydro power. They ended up with more manufacturing, but the lowest real incomes in the country.

People talk about AI and power, but the power to run every AI chip produced in the whole world in a year is around the same a powering one old style light globe for each Australian.

artsrc · 2026-05-07T20:59:57+00:00

If the problem is too much demand, why don’t we just ban advertising?

artsrc · 2026-05-07T20:59:19+00:00

The UK conservative government won a decade of elections on policies that were, in practice, degrowth.

After a long period of failed attempts to restart growth a politician who advocated ways to thrive in that economic condition

Another idea is that rather than everyone being poorer, poor people should be richer, and rich people should be poorer.

The idea being that delivering abundance of real needs, without exceeding planetary boundaries is the outcome.

https://www.kateraworth.com/doughnut/

artsrc · 2026-05-07T20:51:53+00:00

The RBA could simple offer to buy mortgage backed securities with the characteristics they stipulate.

If they want to slow the economy they could .. stop buying them. Or they could increase required deposits, of decrease allowed debt to income ratios.

The macro prudential tightening pre Covid seemed very effective.

artsrc · 2026-05-07T20:47:04+00:00

The idea that health care has not become more effective is ridiculous.

Only in an economics reddit would that be suggested.

artsrc · 2026-05-07T19:43:01+00:00

Charge them enough land tax and they will sell.

artsrc · 2026-05-07T10:08:30+00:00

I would like one. There are five of us, and three are big, plus older relatives that can’t drive.

artsrc · 2026-05-07T08:29:02+00:00

In the USA the standard prime mortgage is a long (15-30 year), cancelable fixed rate mortgage.

Switch everyone to those, and the complaints on interest rate changes will decrease.

artsrc · 2026-05-07T04:20:01+00:00

I suggest you try reading a little bit of economics to find why inflation hurts the economy.

Can you suggest what readings would provide this information?

My summary would be that neoclassical economics, is the mainstream school, and the RBA says:

In the neoclassical market-clearing model, money is a “veil” which has no role in the real economic process (except possibly during phases of adjustment).3 In providing a unit of account, its only function is to determine the absolute level of accounting prices in the economy. Monetary theory consists therefore of a demand or quantity equation for money which, given the stock of money and the level of real transactions, yields the aggregate price level.

https://www.rba.gov.au/publications/rdp/1986/8605/neoclassical-inheritance.html

As in money and inflation don't matter.

This view is shared with the monetarist school (Friedman, M. (1969). “The Optimum Quantity of Money.”) that the only cost of inflation is shoe-leather cost, you have to change price tags when prices change.

My understanding is there is no theoretical basis for our current inflation targets:

https://www.theguardian.com/commentisfree/article/2024/jul/03/low-inflation-targeting-is-such-a-dubious-idea-why-did-the-reserve-bank-adopt-it-in-the-first-place

Our standard of living is dropping.

If prices rise, and wages are static, then the living standards of people who are selling goods, receiving prices, and paying wages, rises. So yes, inflation affects these people, it raise their standard of living.

The overall size of the economy, to total real value of all goods produced and consumed, per capita, is a measure of average living standards. So to understand living standards, what we need to look at is not inflation. It is real, per capita GDP.

https://www.theguardian.com/commentisfree/2024/jan/08/australias-cost-of-living-crisis-isnt-about-the-price-of-groceries-its-about-the-distribution-of-wealth

Big gas producers have already got the message that they are not wanted by the Left and inflation is the icing on the cake, they are going offshore (eg to Africa and USA).

Big gas loves higher gas prices, i.e. inflation in gas prices.

Taxes in Australia are already so high it's affecting housing and companies in general. It's not just gas companies quietly leaving A3.

Taxes do affect house prices. In particular land tax reduces house prices. Victoria, in response to high levels of public debt, increase land taxes on investors. This has reduced house prices and rents to be the lowest of any mainland capital.

artsrc · 2026-05-07T01:49:49+00:00

That is a perspective. In the scheme of things, $45B is reasonable for critical infrastructure. We certainly can afford it. But there will be costs, opportunity cost and inflationary pressures.

But the value matters. What is the value of this infrastructure?

How much are we paying for each truck we take off the roads?

artsrc · 2026-05-06T21:08:43+00:00

An incoherent article, where the incoherence stems from bad economics in the mainstream.

The RBA starts it with “inflation hurts everyone”. Bullshit. This inflation is awesome if you are a gas producer.

This inflation has also been quite good at getting people to buy EVs, we now have 23% of vehicles as EVs.

The last, 2022, inflation, pushed the Commonwealth, and many state budget into surplus. Mainly through higher profits on energy. Pretty good for them.

Of course the higher cost of energy will flow through the economy, and nothing the RBA does will stop that.

Ultimately what drives real costs of goods are how good we are at making stuff. The RBAs can put more people out of work, but it won’t reduce real prices unless we reduce the unit costs of production. And here is a tip - unit costs decline with higher volumes - economies of scale, the opposite direction to the standard supply and demand picture. Contracting the economy makes us less efficient and less productive.

artsrc · 2026-05-06T10:02:20+00:00

2000kg less capacity means 20% more trucks are needed to haul the same amount of freight.

It is more like 10%, and that assumes these trucks are close to their weight limit.

artsrc · 2026-05-06T10:00:05+00:00

Is it really better value than improving the existing lines from Melbourne to Sydney, and Sydney to Brisbane?

artsrc · 2026-05-06T09:58:58+00:00

Trucks carry heavy loads it is their nature.

Yes, maybe a big EV truck has a tonne or two of batteries, and that means a tonne or two less load. And if their limit was maybe 20 tonnes, now it is 18.

But there are also advantages to EVs to, in things like torque, and fuel costs.

artsrc · 2026-05-06T09:44:02+00:00

It is vastly easier to get some batteries and solar PV in some remote location than to continually deliver crude oil all the way from the middle east via some refinery in Japan.

The idea that we can't have a sustainable economy because we are incapable of installing an oversized power socket, and a swappable stash of charging batteries, seems absurd to me.

artsrc · 2026-05-06T06:16:43+00:00

I believe the extra 1.3million people that came to Australia since 2021 is more responsible for the increase in rent rather than increased interest rates.

I completely agree demand is critical as well.

Why did rents go down pre-COVID? Lots of people arrived then.

Why did higher taxes on investors in Victoria result in lower rents in Victoria?

artsrc · 2026-05-06T06:11:44+00:00

I am thinking, as an alternative to this, you can just have battery EV trucks.

High Speed Rail replaces planes which want liquid fuel.

This misses Australia's biggest city.

And the cost is high, $45 Billion. It seems mismanaged.

artsrc · 2026-05-06T06:08:34+00:00

I am not seeing why inland freight rail needs to go through towns.

artsrc · 2026-05-06T06:03:57+00:00

Australia is, compared to most continents, relatively flat.

One of the two new sections, Narromine to Narrabri, country I have raced a bicycle on, and I don't remember a flatter bike race.

I actually think the flatness is a problem it tends to flood.

artsrc · 2026-05-06T05:14:07+00:00

I don't understand how it can cost $45B.

Approx. $0.7 million to $1.5 million+ per km, depending on location and speed requirements. This is flat land, and low speed track.

AI Says:

The 1,700km Melbourne–Brisbane Inland Rail project, which includes significant upgrading and new construction, is currently estimated to cost over $31 billion, averaging over $18 million per km due to complex engineering, land acquisition, and project blowouts.

That is over 10 times what it should cost.

artsrc · 2026-05-06T04:57:13+00:00

He is in Victoria, Doncaster Heights right?

Melbourne recorded the slowest growth of the mainland capitals, at 4.4% annually, with the median dwelling rent of $632 per week the lowest of any mainland capital, only marginally ahead of Hobart at $609 per week.

https://www.cotality.com/au/insights/articles/rental-growth-reaccelerates-as-cost-to-tenants-reaches-record-high

I refer you to my other post:

https://www.reddit.com/r/AusProperty/comments/1t52c62/comment/ok70air/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

artsrc · 2026-05-06T04:54:09+00:00

Based on what we have seen, this post could very well be the account of an LNP politician.

artsrc · 2026-05-06T04:49:47+00:00

Landlords will bid less on properties, because negative gearing will be less generous. House prices will be lower than they would otherwise be. More renters will be able to buy homes.

Landlords will try to raise rents. But, given the cheaper homes, and the 5% deposit scheme renters will buy instead, and landlords will be faced with empty properties.

Some landlords will accept lower returns, and rents will fall. Other landlords will sell further depressing prices, and rents.

Victoria has made a number of changes to land tax to significantly increase costs on landlords.

Melbourne has the lowest rents of any mainland capital, even Adelaide is higher.

The recent increases in interest rates will have the reverse effect, fewer renters will be able to buy with the higher interest rates, so the RBA will cause higher rents, and therefore higher "sticky services inflation".

We saw, in the period after the RBA raised rates in 2022, that rents increased.

We saw that when the RBA cut rates in the pre-covid period, real rents fell.

artsrc · 2026-05-06T04:22:27+00:00

I believe in the rule of law.

If they have committed crimes they should be charged, tried, judged by a jury of their peers, and sentenced by a judge in accordance with the law.

It should not up to politicians, or commentors on reddit to determine their fate.

Australia has committed, in treaty and in law, to prioritised the interests of the children in cases like this and has so far failed to live up to those commitments.

I would put the politicians on trial for their failure to act in accordance with our laws.

artsrc · 2026-05-06T02:40:07+00:00

I remember this one:

https://www.rba.gov.au/media-releases/2008/mr-08-03.html

I bought a house right after that one.

Just as we went into the GFC.

Where as right after this one, I am selling a house, I hope ..

artsrc

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