What prices haven't fallen?
Each day we're met with more discounts - at the supermarket, the hairdresser, even restaurants, hotels, phones and flights are all available at crazily reduced prices. So why is it that inflation is still going up and we're met with pricier gas & electricity bills and more expensive petrol every week? Danial investigates.
It seems that every day now we’re confronted with price reductions. The discounting demon has infiltrated nearly every aspect of business. Milk is now $1 per litre, laptop computers are now well below $1,000, and who out there every pays full price for a restaurant, haircut or massage any more.
Businesses of today have trained us consumers to be continually on the lookout for a discount. We’ve been taught that discounts are good, and in fact that discounts are to be expected. Nowadays, we wait until airfares are bargain basement before we book a holiday and then book our accommodation at the last minute to take advantage of heavily discounted hotel rooms.
Lots of people have blamed the coupons craze for this wild discounting. However, the trend is much greater than just cheap facials and car washes. Retailers are launching a sale for every week of the year. When I was growing up there was an annual Stocktake Sale; today retailers launch sales for Boxing Day, End of Year, New Year, Australia Day, Valentines Day, Mothers Day, Fathers Day, Summer, Spring, Winter, Autumn, Spring Racing Carnival, Christmas, Christmas in July, and I’m not even being creative here, the list goes on and on.
Hotels, airlines, car manufacturers, insurers, and telecommunications companies lead us even further down this discounting path with sales, special offers and discount packages. Even home prices have been on the slide recently.
Yet somehow inflation continues to rise. Surely with a strong Australian dollar, what feels like a slowing economy, and all of this systematic discounting inflation must be a thing of the past? Why isn’t it?
Here’s a clue... Government. Whilst everyone in business is busy giving consumers discounts and helping them buy more for less, the Government is busy raising taxes and increasing the price of our most essential items.
Just over 10 years ago none of us paid 10% GST to the government on everything we purchase. None of us paid Carbon Tax. The government made significantly less from petrol taxes. We weren’t paying inflated prices to privatised electricity companies, tollways, (supposed) public transport companies, telecommunications, ports and airports.
It seems like the only things that are actually increasing in price at the moment are monopolies that the government sanctions, namely:
- Taxes
- Electricity, Gas and Water
- Roads
- Petrol
- Public Transport
- Health Insurance
- Did I miss anything?
Isn’t it about time that the Government joins in the discounting phenomenon along with every other business in the country? Let’s kick inflation forever!
Now that would be the secret to boosting our economy.
What do you think? Share your view in the comments below.
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I'd advise the author study some basic economics and possibly consider that 'kicking inflation' means that everyone (including him) would have to take wage and salary cuts and Government services would have to be cut back.
over a year ago by Damien
You cannot sell something for less than it costs to produce.
The items you mention as never being discounted are that way for a reason - they are essential services, not discretionary spending.
I suggest the author also learn about the psychology of marketing and how many of the 'discounts' on offer, particularly from coupon sites, are flimsy at best.
Finally I'd suggest the author never be allowed to publish another article as this is so ignorant and badly written as to be offensive, and has finally motivated me to unsubscribe from service central. -
I agree with Damien. That this article was considered worthy of being published makes me rethink whether it is worth my time reading anything on this site. The complete failure to understand basic economics (the effects of competition, the different pricing mechanisms for essential services vs optional goods and services) and the over simplistic "blame the government" mentality contributes nothing to the debate, our understanding of pricing movements or our ability to adapt to the price movements.
over a year ago by FelineCyclist -
I think you should keep out of politics and stick to what you know ie, appliance repairs. Then at least your ignorance won't be on public display. eg, there is no carbon tax as yet so how can this have impacted on prices, except by unscrupulous business owners sneakily putting up prices. ( And by the way, pricing carbon is a good thing). Many of the services listed in this article are privatised and we are supposed to live in a capitalist society where competition and supply and demand determine pricing. Maybe you should have a go at the big companies who are making huge profits because they try to reduce competition in the market place, eg Coles, Woolworths and the petrol companies. Or maybe you want a socialist society where the government controls markets and pricing - and then you could blame the government. I too will unsubscribe from this site if there is any more of this rubbish published.
over a year ago by Marg -
Danial is quite correct and raises a very important issue , however he fails to come up with the solution ie
over a year ago by Ken
Governments do not solve problems , they are the problem !
Everything that government departments do , with perhaps two or three exceptions ( defence , laws, etc) would be done far better and far more efficiently by competitive private enterprises competing for the contractual rights to do the various works....... and then we get value for money
thanks for bringing this issue up for debate Danial -
1. Elec and Gas are already subject to competition in most states.
over a year ago by Dobmit
After discounting I pay the same as I did 5 years ago.
2. Water - agreed it's a government rort. When I see the profit my local water retailer Yarra Valley Water makes - I think compulsary TAX!
3. Health Insuance - well we're just paying for an aged population - be grateful you don't live in the US! -
This appears to be one of the most ill informed articles I have read for a while with the writer clearly not having a clue about basic economics or the Australian taxation system. I like other in this comment section need to rethink receiving any more dribble like this in my inbox.
over a year ago by Mark -
Milk, as you say is cheaper now because the ALP removed one of the many 'temp taxes' Howard snuck in with promises to remove soon but never did. He just kept 'milking' them.
over a year ago by Jacko -
Surely food is our most "essential item" yet it is treated as a commodity and discounted to the point where it is environmentally and ethically unsustainable to produce. Discounting of grocery items is dangerous in the long term and should not be condoned by consumers and government.
over a year ago by Michael -
It is of no use to comment talking down to people (the author in this instance, reciting newspaper slogans. Please give one example from your vast economist education to show/prove in plain English the author being wrong.
over a year ago by George -
George, there has been more fact in the comments than in the body of the article. The article is the newspaper slogan heresay ridden text. One would expect the inverse to be true for something advertised via email to us as representative of this sure.
over a year ago by Jacko -
Representative of this site sorry.
over a year ago by Jacko -
While the GST is 10%, it replaced many hidden taxes. The GST's effect on costs depends on what you buy, but it was far less than 10%. If Daniel knows this, he is being misleading. If he does not, he knows little about the cost structure. Either way, the GST statement makes me wonder about the rest of the information in the article.
over a year ago by Cliff Strahan -
Educate yourself on economics, here are some great websites to get you started:
over a year ago by Gina
www.macrobusiness.com.au (best one)
www.talkfinance.net
www.debtdeflation.com
Read up people!!
