Tuesday, May 28, 2024

Price control: Comment by Oscar Tamsen

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Oscar Tamsen, Clarence Valley Independent

We consumers throughout Australia are currently being swamped by multiple discussions over our current serious inflation levels, the mounting cost of living and the way certain commercial, financial and other interests are blatantly over-charging for their goods and services.

As a journalist with an Economics background, may I suggest that the time has probably arrived for us to consider employing price controls or some other device on essential non-luxury food costs, home accommodation rentals and certain health and aged care services.

The subject of placing price caps on the basic things that Australian consumers have to buy for normal everyday existence is, however, far from being anything new. 

Ancient Egypt, Babylonia, the Greeks of Old and the Roman Empire used this method extensively and well from a time over 4,000 years ago to ensure their people did not fall into the realms of poverty and starvation.

In more recent years, including the 1950s to 70s, Spain employed massive price control just as various other modern European economies did during their times of excessive economic and pricing stress.

Both of the First and Second World Wars also saw price control levied as a vital tool to ensure that most families could survive in the face of soaring community prices and the commercial gouging of consumers’ purses.

I personally experienced wartime price control during the 1939-45 period — as many other people did — and when I also worked and lived in peacetime Spain for a time after this. Laws and regulations passed by the Spanish Government forced all essential food products and family services to be officially valued with all maximum prices being published and made available for study by shoppers on the walls of all relevant stores and supermarkets.

At that stage of history some 60 years ago, any Spanish shopkeeper or company director allowing price registered goods and services to be sold at prices above the officially laid-down maximum, faced immediate and unrelenting prosecution and even gaol.

The upshot of all recorded instances of price control by official regulation is that the rising prices of all essential items for basic existence are maintained at affordable levels for all strata of society. In the longer run, this procedure has resulted in vastly improved and more robust national economies facing the possibility of being drowned by inflation, overcharging and fast-spreading poverty.

If one today mentions the two words of “price control” to our politicians of all political leanings, the immediate answer is that it affects producer profits and diminishes the future attractiveness of Australian industry to foreign investors. But we have to remember that we already have well over three million men, women and children living below the breadline in all our States while profiteering and warmongering around the globe accelerates their problems and those of all other consumers.

The introduction of mandated price control in Australia will actually lower poverty, help producers remain competitive and profitable, and will eliminate unhealthy monopolies as currently being experienced in the food and other essential industries.

At this point in time, we in Northern New South Wales already have certain concerns providing important services at increasing non-affordable prices. In one particular case, a professional is known to charge fairly highly for an appointment with him. This is reflected on one receipt he provides but this person then charges his clients an additional second fee, reflected on a second receipt, for the client having “used” the professional’s accommodation for the appointment!

Many recipients of subsidised Aged Care Home Care packages are also finding that their budgets are being charged an additional 30 per cent management fee and an hourly $76 for home cleaning and care when commercial concerns can virtually do the same job for $45-$55 and make an honest 10 per cent profit.

We also have some shops now increasing their prices specifically during our lengthy periods of school holidaymaking, seriously affecting the weekly budgets of some locals and tourists alike.

Capping home rental prices through price control would also assist the growing number of homeless Australians gaining more affordable accommodation in the face of excessive and mounting rentals.

Should price control ever be mentioned to those in authority, they usually claim that it is un-Australian. But in simple economic terms, it is far more effective and less expensive to government budgets than trying to split monopolies, imposing new taxation initiatives, holding Royal Commissions of Inquiry and the various other methods of capping prices in the national interest.

All we have to now remember is that we are currently being bedevilled by two major wars liable to further increase the costs of producing just about everything together with the inflated costs of the distribution and procurement of our everyday needs.

Holding the prices of goods and services is not new to Australia. The year 1983 began an era of a one-in-100 years Government Accord that controlled prices and incomes. This particular year also saw the floating of the dollar and the dismantling of tariffs on imported goods to lower prices, among other perceived economic advantages.

The Accord successfully curbed the inflationary effect of high income demands and set Australia up for 30 years without a recession or uneconomic pricing. Maybe it is time now for at least the imposition of a form of price control within the framework of another national Accord tied to price control? As it is, the Reserve Bank expects real incomes will continue to lose their buying power while the prices of goods and services continue their unhealthy upward trend.

Clarence Valley Independent 8 May 2024

This article appeared in the Clarence Valley Independent, 8 May 2024.

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