Cost of living in Australia

The Australian media is full of complaints about the cost of living in Australia and suggestions we should flood the country with imported goods.Would a flood of imports make a difference to life in Australia? Would the flood be viable or sustainable?

Australia is already flooded with imported goods but the media still find people people to complain about the cost of things. Few people actually make true comparisons of costs.

One day in America I was offered a job paying about twice what the same job paid in Australia. I checked the true cost of living there. In the area where the job was located, an AU$400,000 house cost US$4,000,000. Given the exchange rate at the time, the Australian house would have cost less than US$300,000. The cost of a house in that part of America was more than 13 times more expensive than the equivalent in Sydney. The land tax, called rates here, was about $800 while the American equivalent was in excess of $7000 or nearly ten times as much. Income tax was lower but the actual amount paid out for all the tax equivalents quickly reduced the spendable income. At that time it worked out better to live in Australia. If I had accepted that job, I would have had less than half the amount of spending money. Talking with people over there in that type of job in that location on that level of salary, many of them were living so close to the poverty line that they could afford to put only one child through college. Some were talking about buying a house or having children but not both.

The cost of living in America varies from state to state because many charges and taxes are state based. A small number of big cities were very expensive compared to Sydney. My house is 32 minutes, by train, to the centre of Sydney. I talked with someone who had an equivalent cost house in one part of California. The house was so far out of the city that there was no train. The car trip was 2.5 hours each way. The cost of petrol is lower in California but what value would you put on 5 hours stuck behind the wheel of a car versus 1 hour sitting on a train reading a book or browsing the Internet?

A lot of the things in America where advertised at lower prices than in Australia but often you paid double the advertised price, compared to Australia where you usually pay only the advertised price. A particular helicopter ride in Australia was around $200. The closest equivalent in America was advertised at $175. There were so many extras added on to the American bill that the ride cost close to $350. The same thing happens all over America, Asia, and Europe. There are places, products, and services where the advertised cost appears low but the final bill is higher.

There are a lot of cheap mobile phones advertised on the Internet. You do get a better choice in some countries compared to Australia. You also get a lot of inferior equipment passed off as equivalent. I searched for a particular phone earlier this year. The phone is available in several similar models stepping up about $20 for each increase in features. The phone is available in stripped down packages and more expensive packages with extra cables and chargers. The two things we look for in Australia are unlocked controls and multiple bands so we can use any network in Australia. Many of the foreign web sites sold the phone for $100 less than local sites but ship an inferior model with only one band that will work locally, no car charger, no guarantee, less memory, several features switched off because of the smaller memory, and obsolete design. They were shipping an older model, not the current model. They were shipping a cheap stripped down version destined for the bargain bins in America. Some shops in Australia had that type of junk on sale at $200 off.

A person from New Zealand complained about new Zealand wine being twice as expensive in Australia compared to New Zealand. So what? Australian wide is twice as expensive when purchased in New Zealand. There are shipping costs involved. Another person complained about a European beer costing $6 in the land of manufacture and $12 in Australia. I occasionally buy that beer and pay only $8 in Sydney. The $12 comparison sounds like a gross exaggeration or they went to a fancy restaurant that jacks up prices. Every city has snobby restaurants that double or triple prices just because they can.

Young Australians graduate from university then travel overseas for a year then return home convinced the rest of the world is cheaper. Do they ask the cost of their education overseas? No. If they were to talk with foreign families where the parents have the same type of jobs in a similar sized city, they would find many countries where the parents cannot afford to send children to university.

When you look at any part of life, you find countries where that part of life is cheaper and countries where that part is more expensive. That is why the people complaining about the cost of living in Australia use a different country for every comparison. According to one report, London is supposed to be cheaper to live in than Sydney but people returning from London talk about living in cold damp rooms with no private bathroom and paying double the rent they would pay in Australia for clean healthy spacious accommodation. Then there is the cost of heating. Over one of the long cold winters in London, a friend paid more per month for heating one room that it costs to heat a two bedroom apartment in Melbourne (one of the colder Australian cities I have lived in). The Melbourne winter lasts 3~4 months. The London winter can vary from 6 in a nice house with windows facing the sun to 10 months in basement rooms. The people who like London are the ones who spend their evenings squashed in a pub to keep warm. The ones who prefer Australia are the ones who have young children and prefer to enjoy evenings at home with their families.

How sustainable are the cheap goods from overseas? A good Australian made belt costs $40. I have one that is nearly 20 years old and was worn almost every day. That is good value and should be sustainable. there are lots of cheap imports for $20. They are token leather coated with plastic. I have worn several as alternatives to my wonderful local leather belt. The cheap imports, when worn two or three times a week, fail in less than a year. That is not sustainable.

Ok, what happens when I pay more? If a local quality belt costs $40 then the imported equivalent, with all the shipping costs, should cost $80. $80 belts fail in a year. Imported belts up to $200 fail in a year. Occasionally one will last longer but it has nothing to do with price. It is that fact that so many exporters do not care what happens to their product when shipped overseas. Most of the products imported into Australia have brands on the front that have nothing to do with the manufacturer. Brand is a completely useless indicator of quality. Price is completely useless. One of the few times when a brand actually indicates anything is when we buy a product made in Australia from Australian materials by an Australian company. We then know the factory. we know the business has to supply a good product to stay in business. we can talk with the manufacturers about any faults we do find and the faults are fixed. When you buy junk from a foreign source, the product breaks immediately, and you get a replacement under the guarantee, the replacement breaks just as fast because it is the same junk.

Given that products of real quality last from twice as long up to one hundred times as long, there are real differences in sustainability to consider. Should you pay $40 and use the product 3000 times (300 days per year by 10 years) or pay $20 and use it only 100 times (2 days a week by 50 weeks)? There is a point where cheap products have to be replaced so often that we cannot afford the resources to make all the replacements.

Lowering the cost of living slightly by substituting cheap imports does not lower the cost of living long term. It might make this week's shopping bill smaller but, taking the cost of the belt as an example, to get 3000 days of wear out of $20 belts, I would have to spend $600 on belts.

As another example, compare the cost of computers. I purchased a locally made computer. A friend purchased a slightly cheaper import at the same time. Both had the same specifications. My friend had to return the cheap import many times for repair. In the first year he lost a total of six days work from all the trips to the computer store and the loss of data. His savings on the initial purchase? They were less than one day of work lost. The saving at the time of purchase was the equivalent to 4 hours work, perhaps 6 hours work. He lost 50 hours work or more than the cost of throwing his computer away and starting again with the brand I purchased.

There is little difference in cost between good components and bad components in the computer industry. If you choose a locally manufactured computer, you can check all the components used by the manufacturer. When you buy imported junk, no matter how expensive and fancy the brand might be, you cannot find out what is inside and you invalidate the guarantee if you open the case.

There are real advantages when dealing direct with a local. Local food is fresh. Locally manufactured products give you the opportunity to find out exactly what goes into the product. Given that the money you spend goes into the product instead of shipping charges, the manufacturers have the change to deliver longer lasting products. Long lasting products are sustainable.

When you buy local products, the money stays here and the jobs stay here. The people earning the money from the products you buy, have the money to buy your products. Our local economy is sustainable. Our wages will remain high compared to our cost of living. Every time you buy from overseas, you ship money and jobs overseas. The people receiving the money will never buy your product. You will end up out of a job just like the millions of other Australians who no longer have full time jobs or are working at greatly reduced salaries, because Australians stopped buying products made by Australians.

How unsustainable are the cheap imports? Last year shops were shutting down because people were buying some items from the Internet. This year whole shopping centres are collapsing for the same reason. When the shopping centre collapses, thousands of people lose their jobs in the shops and thousands more lose their jobs because they were supplying the first lot of people. One estimate puts the ratio of secondary losses at five times the primary loss. When a thousand people lose their jobs due to a factory shutting down 6000 people in total are pushed out of their jobs because there is less money in the community.

When you buy a book or CD or DVD from overseas, one shop assistant loses 5 minutes of work plus a shelf stocker and other people working for the shop lose a few minutes. Multiply by the factor of six and you have an hour of employment lost. If you buy 40 books or similar items each year, the community loses a week of work. I know people buying 200 CDs per year. Add in clothes, shoes, and other items, you have one person unemployed permanently. That person directly hits the employment of 5 others. It goes on and on. Some measurements of money circulating show that money goes around at least ten times when spent on local products from local suppliers.

Every time you buy from a foreign Web site, you permanently ship all that money out of the country and it is less money available to buy your products and services. You are the next one to go on the scrap heap.