‘Lucky’ Australia Faces Headwinds
MELBOURNE, Australia — For nearly three decades, Australia seemed to be able to navigate through the dot-com bust and the global financial crisis without a recession, while its citizens mostly enjoyed high wages, affordable housing and golden prospects.
When a recession did arrive, in 2020, it was because of the Covid-19 pandemic.
But four years later, Australia has been unable to shake off some of the headwinds, including a high cost of living — the price of bread has risen 24 percent since 2021 — a choppy labor market and rising inequality. While these and similar issues are also troubling nations like Britain and the United States, they are particularly stinging to many in Australia, which has long seen itself as the “lucky country.”
Australia is among the wealthiest, most resource-rich and stable countries in the world. But millions of residents are experiencing levels of hardship not seen in many decades. They say they are struggling to put food on the table, pay for housing and health care and cover their utility bills. And many young Australians are confronting a reality that their elders never had to: that they will be worse off than their parents or grandparents.
Australians are paying more for almost everything. The pandemic ushered in soaring inflation, which has since softened, though at 3.4 percent it remains relatively high. Rents in some Melbourne neighborhoods are up almost 50 percent year-overyear, and rental affordability is at its lowest in at least 17 years. Consumer sentiment has barely budged since tumbling in 2020.
Homeowners are also under pressure. Australian mortgages are generally fixed for a few years at a time, and as the central bank has tried to rein in prices by raising interest rates, rates have tripled to 6.7 percent in recent years.
Over 16 years, Dave McNamara, the head of Foodbank Victoria, said, “through bush fires and pandemics, I have not seen anything on the scale that we’re currently experiencing of people from all walks of life needing food relief.”
Nikki Hutley, an independent economist in Sydney, said, “Things are a lot worse than they were prepandemic, and there’s little inspiration for us to be optimistic.”
Economists have long argued that too much Australian wealth is tied up in the housing market, even as shoddy policy, construction shortages and high immigration have brought an already low housing supply to a crunch point.
Polling by the think tank Per Capita last year found that fewer than one in four Australians who did not own a home expected to be able to do so.
Australian renters have fewer protections than in most other wealthy nations.
Landlords have relatively few constraints on how much they can raise rent; renters face regular “inspections” of their homes; and the government offers large tax concessions for landlords.
A shortage of rentals has also sent rents skyrocketing in some neighborhoods, pushing young people farther and farther out of cities. In Sydney, the exodus of young families, one recent report warned, risks creating a “city with no grandchildren.”
Despite the country’s plentiful bounty and its oft-stated love of egalitarian values, Australia’s wealth is increasingly unevenly distributed, as the nation joins the ranks of others confronting rising inequality and economic and generational strains.
Economic unhappiness has translated to the lowest levels of “life satisfaction” since records began 22 years ago, according to the Australian Unity Wellbeing Index. The high cost of living, troubling global politics and rising inequality are contributing factors, said Kate Lycett, the lead researcher.
On a recent morning, people waited outside a food bank at a church in Richmond, a neighborhood of Melbourne. The food bank helps more than 100 households, and demand has increased sharply over the last six months, said Francis Flood, the coordinator.
“We’ve seen a lot of people who work but can’t make it through to the end of the month,” he said. “We’re definitely helping people who, if you saw them on the street, you wouldn’t think would be using a food bank.”
An economic gloom settles in, proving hard to shake.