October 20, 2008

Arrhh ... smoke & mirrors of the CPI

We, the public, have long known - factually, not mere perception - that the CPI never has a ring of authenticity.

Anyone who buys the occasional basket of groceries, or buys shoes, clothes and stuff for themselves or their children knows that prices keep shooting ahead of anything resembling the tee wee CPI figure released by the ABS every quarter.

Finally, in simple language that we can almost understand, The Age explains "why is it so", because, yes, yes indeed, it really is so!

While the article is focused on the billions of dollars foregone by those receiving benefits, because of a contorted approach to measuring the CPI, it would have been nice to see a broader brush applied, to remind the punters that they are not losing their minds after all, and to acknowledge that this appalling piece of deception hurts every person in the country, in real dollars (what about workers whose pay increase is often tied to the CPI, even if only as a benchmark?), and psychologically (how many of us feel a tad inadequate when we seemingly buy less, spend more, and are told by our government that the CPI isn't hurting a bit?).

Sure, it's a longish piece, and a bit dry, but it should be - and won't be - mandatory reading for every adult in the country.

Then we should tell the fucking government to stop this smary, smart arsed practice.

Pensioners ripped off


  1. A lower CPI number would reduce future government outlays on pension and other payments. Lower CPI, lower indexed pensions. The aged pension is calculated on the higher of CPI and average weekly earnings. The latter is an estimate.


    By spending less on pensions and social security payments while slowly eroding funding for social services at the same time, successive governments could pass on tax cuts.


    And this also provides the illusion of economic stability allowing the Government to reduce labor market controls (a.k.a. Work Choices), which keep wage-driven inflation in check - again at the expense of the most vulnerable and the most lowly paid.''

    Bingo. In spades…

    Basically, as the fat cat financiers' pay packets expand dramatically, the national average of households' income rises and we are all deemed to be better off because `as a whole' we are able to afford more goods and services - so the price actually hasn't gone up - but rather in real terms it is more affordable so the new CPI falls.

    Abso-bloody-lutely. And they’re just a few that could be lifted from a genuinely good piece. Well spotted Caz.

    Scribbled a piece for Jacob’s blog on the AFPC’s $21.66 “pay scales” (award) increase of July this year an little while back (re-written for WD). One benchmark (one of the most bandied about in submissions) is the CPI. The ACCI argues each and every year that the business community will near go broke and that many jobs will be lost if a rise at or above the CPI is granted. This figure being the underlying CPI, not the “headline” figure. It would, of course, prefer no increase and for these “minimum” or “safety-net” wages to fall in “real” – if not absolute – terms.

    Why the insistence on “underlying” inflation? Because it discounts or removes “volatiles” such as petrol, rent and similar “big effect” items. As if those on “pay scale" wages don’t then have to pay for them.

    Of greater concern, however, is the net effect on those who can least afford it.

    A pregnant sentence. Governments – this current one included – don’t really give a rat’s left testicle. Some in Switzerland would argue that it’s the fault of all those individuals for being that position anyway…

  2. Ah, yes, the good old "volatile" everyday costs - the unavoidable costs, that the common folk can't forgo even if they want to - are excluded, because, gosh gee, they're so darned volatile!

    Like, you know, housing rents go up and down constantly, don't they!

    Unlike a jar of Vegemite, which, is relatively stable in price, and becomes, according to the dictates of the CPI, more an more affordable for everyone when there are a greater percentage of people earning more than a million dollars a year.

    The CPI, as a yard stick for anything is a complete fiction Father.

    Damned disgusting.

    Politics at its ugliest.