‘Corporate price gouging’: sleight of hand for troubled economic waters ahead

When a chippy working on a new school building earns more than the principal who will eventually run the campus, there is definitely price gouging, even on Mr. Fels sloppy definitions. (Although there is some karma in the fact that the chippy on his annual salary of $150,000 has just been dudded of his Stage III tax cut).

There are some good recommendations in the report. The remaining import tariffs on automobiles should go, and governments shouldn't be allowed to "needlessly restrict competition" (which should include a thorough review of the union cartels).

Some recommendations come completely out of the blue without any discussion, and are union-friendly.

One of them is the proposal to, if not abolish the secondary boycott rule, restrict it so it is only illegal if it lessens competition. This would of course make it legal again for unions to target suppliers of companies, so as to bring the company to its knees.

Then there is the abolition of non-compete clauses in employment contracts which appears to be completely unrelated to "gouging."

Providing cover if things go really badly

It looks to me like Australia is facing a rerun of the 70s when dramatically higher energy prices sparked a surge in inflation, fanned by government expenditure, borrowings, and expansive monetary policy. Wages were raised in an attempt to keep up, leading to "wage push" inflation as well as "stagflation" (inflation without growth).

Many of the same features are repeating, resulting in prices going up and wage increases accelerating to meet them.

(Reserve Bank of Australia)

The union movement is moving pre-emptively to deflect any blame from them, knowing that wage rises without productivity increases are unsustainable.

They're not going to blame their friends in government so it has to be big business. And who doesn't love to hate big business?

And Allan has gone along for the ride. I wonder if they put his position up for tender in a proper competitive process, or whether, like a medical specialist (he thinks they price gouge too) he just named his fee?

It's important the rest of us aren't taken for a ride. Productivity and fiscal and monetary discipline are the answer to today's problems, not blame shifting.