Probe on price gouging hears harrowing stories of struggles

September 21, 2023

A probe into price gouging has heard about the distressing experiences of a Melbourne nurse who has seen her budget squeezed by thousands in new costs while her wages stagnate.

Danielle, who has worked as a nurse for 20 years, said she has been left struggling to pay for the doctor and medicines by the cost-of-living crisis.

She told the inquiry her bills, including a mortgage, have risen by more than $8000 over the past year, while her wages have risen just $102 over the same time.

“I already work full time and I feel like I have the best job in the world, but it’s not enough for me to be able to pay for necessities,” Danielle told the inquiry.

“I can usually deal with an increase [in price] of one thing, whether it be a gas bill or the electricity bill or the cost of food, but it has been significantly increased across the board.

“I don’t feel like it’s been justified, especially when I’m seeing big corporations who are reaping the profits.”

The Australian Council of Trade Unions-backed inquiry into price gouging is being led by former Australian Competition and Consumer Commission (ACCC) boss Allan Fels who heard evidence from Danielle and others on Thursday.

Fels said he wants to dive into how prices are actually being set by businesses across the nation amid ongoing debate about whether corporate profits are responsible for high inflation.

“When economists and experts and governments talk about inflation and high prices they tend to focus on everything except the prices,” Fels said.

“I want to focus on the immediate prices, what’s driving them, how are they set, are they fair, [and] would they survive if there was true competition?”

Inflation blame game

A range of progressive think tanks appeared before the probe on Thursday, arguing that macroeconomic evidence shows corporate greed is costing workers dearly across the nation.

As previously explained, the data behind this analysis has been hotly contested; proponents claim figures show higher corporate profits have pushed up prices since COVID-19, while critics – including the RBA – argue the data is too broad to draw such specific conclusions.

The Australia Institute’s Dr Greg Jericho surmised the latest research findings in the affirmative at an appearance before the hearing on Thursday, claiming the macro data told a convincing story.

Per Capita research associate Sarah McKenzie told the inquiry that inadequate competition and consumer laws in Australia have “made it easier for businesses to profit while workers and customers are struggling”.

“Determining what constitutes a reasonable price at the supermarket is quite difficult; we don’t know if these price spikes are because of external factors when we’re at the checkout or if there’s something more dishonest at play,” she said.

Power imbalance ‘growing’

“What we do know is the power imbalance between workers and bosses, between businesses and consumers is growing,” McKenzie said.

“Australian competition, consumer and industrial laws aren’t quite working in the way we think they should.”

Matthew-Lloyd Cape, the director for the Centre for Equitable Housing at Per Capita, provided a concrete example, comparing conditions in Australia’s mortgage market to that of the UK.

He said the largest banks in the UK account for 55 per cent of the market, while it is 80 per cent in Australia.

“While the UK base [interest] rate has gone up significantly further and faster than the Australian base rate, the effect on consumers [in the UK] has been far less,” Cape said.

“The average increase in mortgage rates [in the UK] is 0.5 per cent, in Australia we’re looking at an average increase of 2 per cent … a difference on a $700,000 mortgage of around $300 a month.”

Originally published by Matthew Elmas for the New Daily, 21 September 2023