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Author: Jack Thrower

  • Climate crisis escalates cost-of-living pressures

    Climate Change

    Climate crisis escalates cost-of-living pressures

    How climate change inaction drove up the cost-of-living
    by Jack Thrower

    Author

    Jack Thrower

    Senior Economist

    Media release



    Climate crisis escalates cost-of-living pressures

    Important components of the cost-of-living crisis are a direct result of the climate crisis.

    Failure by policy makers to factor in the impacts of climate change on the cost of living, will limit the government’s ability to address it. Each year we fail to mitigate emissions is another year we bake in cost-of-living pressure in the future.

    Key among these price impacts are the cost of insurance, food and energy. Collectively, food and insurance account for more than a fifth of the consumer price inflation Australia has experienced since 2022.

    Insurance – As the climate has destabilised, the increase in natural disasters has led to an increase in payouts for insurance companies and an increase in premiums for homeowners.

    One in 20 Australian households now pay more than seven weeks of gross income on home insurance. In other words, these households work from New Year’s Day to late February, just to pay their home insurance.

    Increases in insurance premiums have hit certain regional areas particularly hard, where average household incomes are lower than urban areas while premiums are higher.

    The price of insurance in many areas of Australia have already become prohibitively expensive. As continued global heating and more frequent disasters make these problems worse, whole suburbs or towns will become uninsurable.

    Food – Food prices have soared by about 20% since 2020. The planet’s changed weather patterns have impacted food production and, in some areas, permanently affected a region’s ability to grow particular crops. Climate impacts mean that even if Coles and Woolworths stop price gouging, food prices will keep rising.

    Energy – Australia’s energy system is complex. Underinvestment in the transition to renewables and tying ourselves to international pricing mechanisms by exporting fossil fuels has resulted in high local electricity prices for Australian households. Even if we were to decouple ourselves from this, energy prices would continue to be impacted as more climate disasters damage vital public infrastructure.



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    Climate crisis escalates cost-of-living pressures

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  • Life Savers Without Life Savings

    Labour Standards & Workers’ Rights, Retirement, Wages & Entitlements

    Life Savers Without Life Savings

    Early retirement and superannuation for firefighters and paramedics
    by Jack Thrower

    Author

    Jack Thrower

    Senior Economist

    Firefighters and paramedics save lives, protect us from the ravages of fire, and ensure the sick and injured receive the medical treatment they need. However, after a working life protecting others, these emergency workers face substantial risk of having inadequate retirement incomes.

    Firefighters and paramedics are regularly compelled to retire early due to particular barriers to working beyond the age of 60. Workers in these intense and challenging roles should have access to early retirement options. However, early retirement means fewer years for superannuation to grow and more years in retirement drawing on superannuation.

    The possibility of superannuation running out is significant even under relatively optimistic assumptions.

    This paper provides simulations of retirement income trajectories for firefighters and paramedics under a range of assumptions. For firefighters, these show, under relatively optimistic assumptions, an early-retiring single firefighter can expect their superannuation to run out six years before male life expectancy, nine years before female life expectancy, and 15 years earlier than for a regular retiree (retiring at 67). Under alternative scenarios, incorporating plausible risks, an early-retiring firefighter can expect their superannuation to run out 15 or more years before life expectancy.

    For paramedics, the challenges are similar and severe. Our simulations indicate that, even under optimistic assumptions, an early-retiring single paramedic can expect their superannuation to run out seven years before male life expectancy, ten years before female life expectancy, and 14 years earlier than for a regular retiree. Considering plausible risks, an early-retiring paramedic’s superannuation could run out 15 or more years before life expectancy.

    To extend superannuation longevity through to the age of their expected lifespan an early-retiring firefighter or paramedic would need to reduce their annual living expenses by 18.5%.

    Given the challenges of continuing their work in these intense roles past age 60, it is unacceptable that retired firefighters and paramedics should have either significantly reduced living standards or risk running out of superannuation in retirement.

    Among the range of potential policy responses considered in this paper, one response with promise is to increase employer superannuation contributions for emergency responders and supplement this with a one-time special superannuation contribution for workers already approaching retirement.



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  • Economic Prosperity, Public Sector Restraint

    Wages & Entitlements

    Economic Prosperity, Public Sector Restraint

    Unpacking South Australia’s Economic and Fiscal Advantages in the Shadow of Public Sector Pay Erosion
    by Jack Thrower

    Author

    Jack Thrower

    Senior Economist

    New report contrasts South Australia’s economic progress with continued public sector wage restraint

    By many measures, South Australia has enjoyed the strongest economy of any state in Australia. Its economic growth has been faster in recent years than any state – and in per capita terms, its prosperity has improved twice as fast as the national average. It enjoys a stable, diversified economic base: reflecting a virtuous combination of strong business investment, exports, household consumption, and government spending (both on current services and on capital investment). The state’s labour market has been operating at or near record-low levels of unemployment and underutilization.

    Unfortunately, this economic progress has not been reflected in improvements in state-funded public services in South Australia. The proportionate share of the economy contributed by state-funded services and infrastructure investments has been declining since before the pandemic (and is now lower as a share of the state’s economy than any other state). State public sector workers have borne the burnt of this restraint: their wages have lagged far behind inflation, resulting in a painful real wage cut for state employees.

    In a new research report, Economist Jack Thrower shows that real wages for state public servants in South Australia have declined by as much as 10% since 2019. This represents a one-tenth reduction in the real purchasing power of their salaries, imposing severe financial stress on tens of thousands of households – and undermining consumer spending and economic growth.

    The report also confirms that South Australia possesses abundant fiscal capacity to repair this damage to real compensation for public sector workers. The state government’s core revenues are growing much faster than core expenses, and the budget is projected to return to surplus this year – faster than any other state other than Western Australia. Rebuilding public servant wages to catch up to past inflation should be a vital priority for the state government.

    Please read the full report, Economic Prosperity, Public Sector Restraint: Unpacking South Australia’s Economic and Fiscal Advantages in the Shadow of Public Sector Pay Erosion, by Jack Thrower.

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  • Solid Foundations, Bright Future

    Education & Training, Industry & Sector Policies, Tax, Spending & the Budget, Wages & Entitlements

    Solid Foundations, Bright Future

    An Analysis of New South Wales Economic and Fiscal Advantages
    by Jack Thrower

    Author

    Jack Thrower

    Senior Economist

    New South Wales has one of the most prosperous and productive economies in Australia, with a diverse base of economic activity and strong labour market. However, years of austerity have hollowed out its public sector, creating one of the proportionally smallest state public sectors in the country in terms of both economic activity and employment.

    Despite the instrumental role the public sector played in navigating the state through the pandemic, weak wage growth and rising inflation have compounded the impacts of austerity, leading to significant reductions in public sector real wages. While the current government’s scrapping of the wage cap and implementation of public sector wage rises has undone some of this damage, most notably the October 2023 wage rises for public school teachers, more repair is needed.

    The NSW government has a strong fiscal position with which to manage these challenges. NSW maintains nearly the highest credit rating in the country and relies on revenue bases that are both diverse and stable. Additionally, there is considerable evidence that, if needed, several options are available to increase state government revenue. As the state economy weakens in response to high interest rates and declining real incomes, the state government has the responsibility to contribute to support the economy and broader society, through expansion of public services, repair of public sector wages, and support for the most vulnerable.



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