Labor's big spending prolonging cost of living woes for vulnerable Aussies by fuelling inflation, AMP's Diana Mousina warns
Labor's "perverse" big spending has prolonged post-pandemic inflation and impacted Australia's most vulnerable, a leading economist has warned after fresh data revealed struggling Aussies were experiencing higher price increases.
The Australian Bureau of Statistics on Wednesday released its selected living cost indexes, which measures prices changes for different household types and how it impacts them.
It revealed prices for pensioners and beneficiaries (up 1.6 per cent), aged pensioners (up 1.5 per cent) and those receiving other government payments (1.6 per cent) all rose significantly during the March quarter.
The increase was just 0.6 per cent for self-funded retirees while employees experienced a 1.1 per cent jump in prices over the three-month period.
A major factor contributing to the increase for pensioners and others receiving government payments was health costs - up between 6.9 and 9.5 per cent for these household types.
This was due to a smaller proportion of households receiving subsidies under the Medicare Safety Net and Pharmaceutical Benefits Scheme.
The price rises for the most vulnerable was a concern for AMP's deputy chief economist Diana Mousina who noted how Labor's big spending policies, which were aimed at tackling the cost of living crisis, could prolong post-pandemic inflation and hurt Aussies in their hip pockets.
'It's sort of a bit perverse in a way because we've had a cost-of-living challenge because of high inflation predominantly,' Ms Mousina told SkyNews.com.au.
'If you just keep on giving more money back to households you run the risk of creating an additional cost of living problem because people feel like they're cashed up again more and they can go and spend that money.
'So, the government needs to be careful, they can't just continually give people money back. That's not the right strategy to actually help with the cost-of-living environment.'
Alongside health price rises, electricity also soared for all household types as most households in Brisbane had used up the $1,000 Queensland State Government rebate.
Some households were slugged with higher electricity bills during the March quarter due to the timing of 2024-25 Commonwealth Energy Bill Relief Fund rebates.
Ms Mousina argued Labor's large government spending, which has reached a several decade long high excluding the pandemic, could have an adverse long-term impact on these Aussies who are now slugged with higher prices after government subsidies phase out.
'If you look at what's happened in the last year and a half, could inflation have been lower if the government didn't spend so much? I think probably yes,' Ms Mousina said.
'We don't know to what extent. But if we just basically look at the change in government spending over the past two years, we can see that it's continually been raised up.'
She also acknowledged the Albanese Government's cost of living subsidies have helped vulnerable Australians struggling with the cost increases in the short-term, but noted there were downsides when it came to the big picture.
'It's not like it's been adverse to the most vulnerable groups. It has, of course, helped those groups,' Ms Mousina said.
'But when we're talking about the macro picture, the overall level of government spending, has not helped the inflation problem.'
While Ms Mousina warned about Labor's big spending prolonging inflation, the Australian Council of Social Service's CEO Cassandra Goldie called for better incomes those receiving support in the face of high medicine costs.
"While governments must ensure that our health system is properly funded so people can get the care they need, including medications, it is also critical for the government to recognise that people need an adequate income to cover these and other expenses," Ms Goldie told SkyNews.com.au.
"We know that people on the lowest incomes – people receiving income support – often go without essential healthcare and medication because they cannot afford it."
She called on the Federal Government to hike incomes for people receiving government support to "have enough to cover basic costs".
"Income support payments must be lifted to at least $82 a day, and supplementary payments must be in place that recognise the cost of chronic ill health, disability and other circumstances people face,' Ms Goldie said.
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