Are we Australians paying way too much?

[Gentle_Chief]

OK Gentle Chief, I'm happy to leave it there up against that logic.

Hiya Dazz, I am quite keen to listen to your perspective!

Just that I disagree with the comment that the items listed are "non-essentials". Also you had missed Aussie bred Lamb/beef from your List and they are an essential.

Okay maybe not Jack Daniels or a Chicken Burger for everyone...

How about vegetables, meats, fruits, day to day clothing, blankets, sofas, doonas, cars, ipads, shoes, toothpaste, mobile phones, bus-tickets to everything else under the sun? There is not a single department that we can say we Australians are competitive with the world.

We have killed our manufacturing edge with these pricing. Exports is dying or dead. Barring coal & iron ore and other resources.

Something that may interest you...

What is the market rent per sqft on a Commercial IP (office space) like in Sydney, say the suburb of North Sydney to take as an example? We are talking about well furnished office rentals.

$30, 40, 50 even 70 per sqft per annum for the premium types in N.Sydney.
(like 400-450 per sqm)

How about $6 per sqft per annum rent on a mid rise building (8 floors) built in 1996 in a major metro with over 2 million people in the city? That is like 60 per sqm.

That is the price in USA!

A national company was the anchor tenant had just vacated to move into their own building constructed down the road. So you know the location. Nicely located in the corner of two major interstate highways. Posh location with plenty of restaurants and businesses around in every direction.

What I am saying is Simple,
We are paying way toooooo much for everything here in Australia.

Because we think we are in a 'lucky' country. It is a fallacy.

I am a proud Australian. But also a worried Australian - for my children's generation. We will get rid of every job and corporate very soon.

 

[tom32]

There is not a single department that we can say we Australians are competitive with the world.

Energy and Ore.

We are lucky because the world needs more of both at the moment.

 

[Gentle_Chief]

Energy and Ore.

We are lucky because the world needs more of both at the moment.

Tom32,

Sorry to say, but this exact thinking is making us another Saudi Arabia.
As they say, No future without Oil.
I have worked in Jeddah on a project for a year.
And I know how scared my Saudi friends are for their own future. Their government is now insisting on developing Skillsets. Toward taking it away from Oil reliance and more so as a Trading hub.

Great if you think the Aussie Coal & Iron ore are going to command the same price as always. Look around mate. From inner Mongolia to South America to the USA and even in China the world is developing newer sources of these very same resources. In larger quantities that will dwarf the Australian supply.

 

[Corey Batt]

To reduce costs we need to reduce the standard of living.

This is practically and politically impossible.

Instead we outsource what we can, and do what we're good at.

Same reason I make home made lasagne, but buy clothes from a store.

Ask yourself, whats stopping Australian's from starting their own nifty global companies, using overseas labour for manufacturing and sell for a large mark up? only protectionist short sightedness.

I'd rather be the Global company owners, than the local uncompetitive manufacturer.

 

[Ausprop]

To reduce costs we need to reduce the standard of living.

This is practically and politically impossible.

Instead we outsource what we can, and do what we're good at.

Same reason I make home made lasagne, but buy clothes from a store.

Ask yourself, whats stopping Australian's from starting their own nifty global companies, using overseas labour for manufacturing and sell for a large mark up? only protectionist short sightedness.

I'd rather be the Global company owners, than the local uncompetitive manufacturer.

it's a good point and one often forgotten when people start wishing for a weaker dollar. You can be the guy assembling the iphone for $1 an hour, or the guy that designs it on a huge salary and profit share

 

[lizzie]

We're within weeks of putting out our first line of products ... believe it or not ... cheaper to manufacturer in Australia (Melbourne) than Asia and much much more reliable as to quality and timeliness.

We researched Asia and India for aorund 6 months, believing we would find a better cost overseas - that was a great 6 months learning curve and a real eye opener on misguided ingrained beliefs that we can't compete - or it can't be done here.

Do we pay to much? Sure - on a lot of things. The problem with Australia is that we are not a big enough population base to attract discounts - we are a boat or plane freight away from anywhere - which also means there is a mark-up middle man (which we need to dispense with).

Sure we pay high government taxes - ouch - but I'd sure as heck rather get seriously sick in Australia than the USA. And our tertiary schooling is not as expensive. And I'd rather be unemployed or disabled or a carer or suffer a work injury in Australia.

 

[Gentle_Chief]

We're within weeks of putting out our first line of products ... believe it or not ... cheaper to manufacturer in Australia (Melbourne) than Asia and much much more reliable as to quality and timeliness.

We researched Asia and India for aorund 6 months, believing we would find a better cost overseas

Lizzie, mind sharing what you are manufacturing and what the rough breakup of costs are in terms of raw materials, labour, rent, shipping etc....

Just would like to understand how it is cheaper manufacturing in melbourne compared to asia...

If what you are saying is true, then this could be the silver lining....!

 

[Intrinsic_Value]

For the record I am in the US now on a 3 week Business Analysis trip. To my shock and amazement, everything in the USA is far too cheap!! And better quality!! I am just going nuts...

.

Gentle_chief, in the words of Obi-one Kenobi, 'search your feelings'.

And your feelings are on the right track, now you need to translate those feelings into investment strategies.

 

[Indifference]

Sure we pay high government taxes - ouch - but I'd sure as heck rather get seriously sick in Australia than the USA. And our tertiary schooling is not as expensive. And I'd rather be unemployed or disabled or a carer or suffer a work injury in Australia.

Medical - Mrs Indi needed spinal surgery last year. Done in the USA.... would we have preferred it be done in Australia. No. Our experience was first rate. Depends on your circumstances & level of health cover but if you are covered, US health care is excellent, in our experience.

Tertiary Schooling - I have completed a Bachelor's degree in Aust. & Master's degree in the US. Cost --> fairly comparable. In my experience.

Unemployed - Australia is the stand out here.... If you want to live large at the taxpayers expense, then live in Australia. This is a big part of the problem.

Work injury - I have a good friend in the US that has been on injury benefits for 18 months (about to go back to work). Not sure that Australia is that far in front in this area from what our friend has told us. Somewhat comparable from what we have seen.

I only make these comments because I often hear misconceptions about what people think it is like & what we have experienced between the great US/Aussie differences. The biggest advantage of living in Australia is the social safety net.... but some of us just don't need it & its existence largely accounts for the cost of living differences. This is why many Australians choose to live their early retirement years abroad & when medical/carer service requirements start to increase, they return to access those social safety net services.

 

[Sunfish]

Indi, If I were to take up residence in the US [temporary or permanent] how would I take out health insurance? Do I just walk into the HI shop and buy it, expensive?

 

[lizzie]

Indi - you health care experience was good because "you were covered". In Australia, everyone is fully covered. I'd hate to get sick and not have private (expensive) insurance in the USA.

I wasn't comparing the quality of the education - rather the cost.

I was also thinking of permanent disability from work or leisure activities.

Gotta go - school run

 

[lizzie]

If what you are saying is true, then this could be the silver lining....!

I'll start another thread in the coffee lounge when I have the first run of products in my hot little hands.

It was the sheeting the products are made out of that cost the same to make in Asia and bring into the country, by the time you added shipping costs - and, being a plastic sheeting material, I didn't want to run the risk of it being left on the docks in Singapore for weeks to melt and warp as the container heated up inside.

Another reason it is more cost effective to make this range of product in Australia is that it's not a "big" run product ... ie, it's not a case of making a machine and shooting off 10,000 identical products at a time.

Although we can gear up to a large run if required - but - for various reasons (not in the least because of the way the sheeting is made) every single product is unique and cannot be replicated.

What I was really surprised at was the cost is low enough that, even tho every product is unique, it is still readily affordable.

Teased you enough now

 

[tom32]

Tom32,

Sorry to say, but this exact thinking is making us another Saudi Arabia.
As they say, No future without Oil.
I have worked in Jeddah on a project for a year.
And I know how scared my Saudi friends are for their own future. Their government is now insisting on developing Skillsets. Toward taking it away from Oil reliance and more so as a Trading hub.

Great if you think the Aussie Coal & Iron ore are going to command the same price as always. Look around mate. From inner Mongolia to South America to the USA and even in China the world is developing newer sources of these very same resources. In larger quantities that will dwarf the Australian supply.

I am right with you there!

I was kind of being tougue in cheek but it is not only projects in those other countries which will drive down price of ore it is projects in Australia as well. Once the price drops the projects stop being invested in and a whole lot of people are out looking for work.

Theoretically this should lead to the dollar dropping again and other exports becoming more competitive but as you know the theories of economics in practice can mean a whole lot of pain, i.e. the transition from one point in equilibrium to another after some external or internal shock are not smooth

 

[MIW]

Are we just plain lucky (like the Saudis) that we have the resources of coal and iron-ore under our feet?

P.S: there are larger deposits of these very same resources being found in Mongolia, on the door-step of China.

Wake up now mate & God bless Australia.

Our friend just bought few infastructure coal mines in US now. With carbon tax, mining tax coming he sees opportunities abroad. Smart people will go where the best deals and profits are....

 

[MrCrumbpacker]

Here's quick comparison which is enlightening.

BMW 760li, UK list price $150K in AUD,


same car in Australia, list price $ 386K in AUD,


yes I definitely think we are paying too much here.

 

[Aaron Sice]

check out the luxury car tax rate.

 

[MrCrumbpacker]

check out the luxury car tax rate.

I know, dreadful isn't it!, any excuse to make us pay more.

That said even on smaller cars such as the Fiat 500, we are paying nearly double.

 

[Aaron_C]

I know, dreadful isn't it!, any excuse to make us pay more.

That said even on smaller cars such as the Fiat 500, we are paying nearly double.

That pretty much applies to anything that's not a plasma TV or an iPad. We are the expensive country.

 

[Peter 14.7]

Great Thread.

My input is on the French Property and why you cannot compare one Country Property with another.

FYI I traveled in France in 2010 and then at wife's interest, looked into buying property. Here is what I learn't.

Area is Domfront. I drove through here. Middle of national park, Very beautiful but what do you do for work? Biggest income is tourism, but this area is not prime Normandy but lower towards Brittany. Most tourists want D Day Beaches. You need to get them. But even tourism is low paying, We paid on average only $100EU to $150EU a night for BNB in luxury for three.

It looks too new to be 1800. A lot of the homes are rebuilt because Normandy was bombed to bits in WWII and then rebuilt with original stone. Domfront was the Falaise Pocket a major battleground. This is good thing for maintenance but means it is not special to French. It is only 70 years old.

Domfront is almost 4hr plus drive to Paris. Nearest Rail line Flers, 30 minutes away. We are talking about the equivalent of Orange NSW or Yass NSW.

That is serious money for $625k EU. Convert to AUS you are talking $750k. You can get a lot of Aussie House for than money in Yass, although I will admit French Architecture is stunning.

So you are miles away from any real action and you need an income and/or job. But jobs pay French money. Minimum wage is $15k EU. French Taxes are high. Not much call for $200k pa experts here.Once over $70k EU household, not individual, you pay 41%. French gov includes all including world wide as income.

You are buying a lot of maintenance. It costs a lot to heat. It snows each winter. See pics on web. There will be no lifts.

And now the hard bit and why Apples can be Oranges:

Capital Gains Tax (Inheritance Tax) can be as high as 60%. Very complex laws, most French inherit property via family to lower CGT. I tried to understand this but it was too complex. Ans the payer of the tax is the recipient aka buyer.

GST (VAT) is 19% hence black economy is strong and cash is king.

Getting clear title is your risk and very high due to the family tax issues. Any old niece can say they were due 5% and halt the sale.

Also in France you cannot chuck out tenants that don't pay if it is winter. So many simply pay until winter and then stop.

And get this, income tax only applies if you rent for more than 26 weeks so there is no neg gear. Every claims only 26 weeks. That is why Aussies often rent via Sites to Aussies. They pay and the income is black.

Food is very good and cheap for dining out but equivalent for supermarkets although quality is stunning. Hot baguettes are like $1 at the bakery. Roast Chicken is $15 but from the local farmer. Diesel is very expensive so everyone drives a small car. There are not many BMW X5. Try Citroen C3. Education is free and very good.

The French Gov only allow French citizens to get loans of 30% of their income in servicing. That is total loans including car, credit cards, etc..that is why it is cheap RE but will stay cheap, like under 50m2 units. No finance. And again, minimum wage in $15k EU as opposed to $28k AUD here.

I.e. We stayed in Épernay in the glamorous and employable Champagne region in the centre of town. 3 bed, 2 bath Apartment with view over vineyards worth $400k. 130km from Paris but only 1hr by VFTrain.

In short, this is some Rich Poms Holiday Dream they are now off loading. If you have a love of French, speak French and independently wealthy, a good find. But lifestyle only, no investment.

Location means Poms may come back. 6hr Drive from London but a lot fly and airport not nearby. I should add, driving in France is not like driving the Hume to Yass or Western Hwy to Orange. It is very busy and very exhausting. More like driving the F3 to Newcastle or Morning ton Freeway to Sorrento in Friday night Peak - all the time. And it snows.

So that dream property is not a far comparison.

On the other stuff I agree and the internet will change our retail. We buy from Marks and Spencer UK with postage less than here.

Regards Peter 14.7

 

[wylie]

Thanks for such a great post Peter. I LOVE hearing all that nitty gritty and tried to ask a few questions of the private rental owner when we went to Paris last year. We weren't looking to buy anything, but I really am interested in how they live in other places.

Your answer is what I would have loved to hear from our Paris landlord, but felt too nosy to ask. What I did learn is that the old bakery that we stayed in is owned by his "family". I don't know if that means his parents. He was about 30 years old. He managed more than one apartment, and I would have loved to know how much it was worth, did they renovate it, etc.

He met us at the old bakery apartment, showed us which bakery to buy from, gave us a short tour of the area (not a tourist area) and did say that he didn't own a car. Nowhere to park! He does everything on the Metro.

We were staying about 5km or less (walked easily to the Eiffel Tower) which is equivalent to how far we live from the CBD in Brisbane, but the buildings were all high rise apartments, beautiful old buildings. So different to our freestanding houses on 600sqm blocks.

I would have loved to have heard more about how people lived, but my french is non-existent.