[Greens-Media] MEDIA RELEASE - SENATOR CHRISTINE MILNE - CPI does a poor job of measuring the cost of living: Greens

[Willis, Katrina (Sen C. Milne)]

MEDIA RELEASE
		
Monday, 18 September 2006

CPI does a poor job of measuring the cost of living: Greens

A new report released today by the Australian Greens shows that the
Consumer Price Index (CPI) is doing a poor job of measuring the cost of
living of ordinary Australians.
		 
"Few people realise that the CPI ignores the cost of mortgage interest
payments, ignores the cost of the land that new houses are built on and
ignores the cost of established houses," Greens Senator Christine Milne
said today.
		 
"John Howard keeps telling everyone that their 'real wages' are rising
faster than ever before but this new analysis conducted for the Greens
shows that ordinary Australians are likely to be hurting more than the
official figures suggest."
		 
The report prepared for the Greens entitled "Let them eat cake - How low
income earners are disadvantaged by the consumer price index" highlights
the impact of the 1998 decision to remove mortgage interest payments
from the measure and points out the difficulties associated with using
an average measure of price changes when some prices are rising rapidly
and other prices are falling.
		 
"The CPI describes the average change in a broad 'basket' of goods and
services. What we have found, however, is that some items in the basket,
such as fresh fruit and vegetables, petrol and public transport, have
been rising faster than average while other products, such as electrical
appliances, new cars and junk food, have been rising more slowly," said
Senator Milne.

"What this shows is that the gap between rich and poor is growing for
two quite different reasons.  Firstly, because the wages of high-income
earners have been growing the fastest, and secondly, because new
televisions and overseas holidays are relatively cheaper, while
necessities like fresh food are more expensive."

Major findings of the report include:
*	Between 1996 and 2006 the price of audio, visual and computer
equipment has fallen by 68 per cent. Over the same period fruit prices
have increased by 112 per cent and vegetable prices have increased by 70
per cent. 
*	Since 1996 the price of private cars has declined by 19 per cent
while the cost of public transport has increased by 49 per cent. 
*	The prices of bread and health services have risen by 48 per
cent and 50 per cent respectively. 

"The CPI has its uses, but the ABS is the first to concede that it is no
longer a cost of living index," Senator Milne said.

"It is time that the government funded the ABS to construct a proper
cost of living index that includes the costs of mortgage repayments, the
cost of land, and focuses more on the costs of the essentials that
low-income earners rely so heavily upon."

The report can be downloaded from the speeches section at:
www.bobbrown.org.au  

Contact: Katrina Willis 03 6234 4566 or 0437 587 562


Katrina Willis
Adviser
Senator Christine Milne
Phone 03 6234 4566
Fax 03 6234 2144
Mobile 0437 587 562
www.christinemilne.org.au