Analyzing Positive Inflation Trends and the Cost of Living Crisis

This chapter analyzes the recent inflation data, noting a favorable 2.1% annual CPI that aligns with target metrics. It also explores the relationship between inflation, core measures, and the ongoing challenges in real purchasing power due to prior income recession.

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Episode notes

Show host Gene Tunny and Australian Taxpayers’ Alliance Chief Economist John Humphreys tackle hot topics in Australian economic policy: the case for a cash flow company tax, the politics and maths of a gas ban, why stamp duty drags the economy, the growing size of government and the cost of living crisis.

Please email Gene your thoughts on this episode via contact@economicsexplored.com.

Timestamps

Introduction and Greens’ Gas Ban (0:00)
Government Spending and Adverse Effects on Economic Dynamism (8:32)
Stamp Duty and Efficiency Cost (19:42)
Inflation Data and Cost of Living Crisis (25:39)
Productivity Commission's Company Tax Reform (28:55)
Workers' Compensation and Tax Incidence (43:11)
Tariffs and Taxation (54:52)

Takeaways

Cash Flow Tax Reform – The Productivity Commission proposes cutting company tax to 20% for most firms, adding a 5% cash flow tax, and keeping the system revenue neutral—aimed at boosting investment.
Gas Ban Impact – John argues the NSW Greens’ proposal would delay global warming by only 10 hours by 2100, even under optimistic assumptions, yet could raise costs for consumers and businesses.
Stamp Duty Inefficiency – Economic modelling by the Centre of Policy Studies (CoPS) shows stamp duty’s deadweight loss at 70–80 cents per $1 raised, far worse than GST or income tax.
Government Spending Growth – The CIS’s Robert Carling claims over half of Australians now earn primary income from government sources, raising concerns about productivity and political incentives.
Hidden Tax Burdens – Workers’ compensation costs, though nominally paid by employers, often reduce workers’ wages in the long run, John argues.