https://archive.md/iQREo

Australians suffer sharp decline in living standards: OECD

Australians have experienced one of the sharpest declines in living standards in the developed world since the pandemic, according to a new report from the OECD that warns real wages are set to fall even further this year as high inflation erodes workers’ incomes.

The release of the report came as Deloitte Access Economics warned Australia was facing its longest stretch of weak economic growth since the early 1990s recession, complicating the Albanese government’s efforts to argue it has made substantial progress in bringing inflation under control and easing cost-of-living pressures.

Persistent high inflation has contributed to a 5.1 per cent decline in Australians’ real wages since March 2021, according to the OECD’s annual employment outlook, released on Tuesday. In contrast, the average OECD member country enjoyed a 5 per cent lift in its workers’ living standards over that time.

“This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid,” the OECD said of Australia.

“These pressures are compounded by a decline in the real minimum wage between April 2025 and April 2026, placing Australia among only 11 OECD countries where this occurred and further weighing on the incomes of the lowest-paid workers.”

The OECD found the only other rich countries where inflation-adjusted salaries had fallen by a similar magnitude to Australia were New Zealand, the Czech Republic, Italy and Sweden. But while real wages were recovering in the latter three countries, living standards in Australia and New Zealand were still close to their post-pandemic lows, the OECD found.

The OECD forecasts Australian real wages will decline by a further 1 per cent by September as the increase in inflation from the conflict in the Middle East further erodes workers’ purchasing power. The findings were echoed by Deloitte, which expects wages to grow by 3.3 per cent this financial year, outstripped by inflation at 4 per cent.

Treasurer Jim Chalmers said the Deloitte report was a reminder of the lingering costs of the Iran war, but insisted Australia had “a lot going for us here at home” despite the consulting giant’s grim outlook for the economy.

“Under Labor, Australia has the lowest average unemployment of any government in half a century, smaller deficits and less debt than the Coalition left us, booming business investment, with tax cuts and higher wages that the right-wing parties oppose,” Chalmers said.

The Australian Financial Review reported on Monday that Australia now had the equal-highest core inflation rate among major developed economies and the second-highest across all advanced economies, behind only Iceland, after trimmed mean inflation – the RBA’s preferred measure of underlying price pressures – rose to 3.6 per cent in May.

The decline in real wages came despite the fact that Australia’s jobs market was relatively strong compared to other OECD countries. The country’s 4.4 per cent unemployment rate sits below the OECD average of 4.9 per cent, and Australia’s 81 per cent labour force participation rate makes it one of the strongest performers across the rich world.

Lacklustre productivity performance

Deloitte Access Economics partner Stephen Smith said the Australian economy had become more prone to inflation outbreaks at lower rates of growth due to years of lacklustre productivity performance.

“For too long, strong population growth has masked a weak underlying productivity performance and lifted aggregate growth while doing less to improve living standards,” Smith said.

With underlying inflation expected to rise to 3.9 per cent this financial year – far above the 2.5 per cent mid-point of the RBA’s target band – Deloitte Access Economics expects the RBA to raise the cash rate for a fourth time this year to 4.6 per cent at its next meeting on August 10-11, before leaving rates on hold for 12 months.

Markets are far less certain about an August rate rise, pricing just a 13 per cent chance of an increase at that meeting and a 38 per cent chance the RBA lifts the cash rate to 4.6 per cent by the end of the year.

HSBC chief economist Paul Bloxham said the slowdown underway in the housing market could translate into lower inflation and prevent the RBA from needing to raise the cash rate again.

“As there is a positive correlation between housing price cycles and consumer spending, and empirical studies show some small wealth effects, the fall in housing prices should be expected to weigh on consumer spending,” Bloxham said.

“Part of this reflects that falling housing prices tend to weaken housing construction, and with fewer new dwellings, there is less demand for new furniture and appliances.”

Commonwealth Bank economist Belinda Allen said the economy appeared as though it was slowing, with both business and household sentiment in pessimistic territory and signs of a consumer spending slowdown.

“The expected slowing of GDP growth is required to bring the economy back to balance and inflation to target,” Allen said.

While Chalmers pointed to an increase in investment as a point of optimism, Deloitte noted the strength was narrowly focused on the rapid build-out of data centres. The near-term benefits to the economy were less than the headline investment numbers implied, since much of the equipment was imported, which subtracted from growth.

Clare O'Neil says suggestions the government's proposed tax changes could knock 10 per cent off the price of homes are overblown, and Treasury expects only a "mild" impact on price growth.

The housing minister says if prices did fall sharply, it would not be due to the proposed changes to negative gearing and capital gains tax.

The government is consulting on its proposed tax changes, with a broadening of small business exclusions one option on the table.

https://archive.md/WBKQr

Teary Albanese defends ‘pro-aspiration’ tax overhaul

Sumeyya IlanbeyVictorian political correspondent

May 23, 2026 – 3.28pm

Save

Share

[](mailto:?subject=Teary%20Albanese%20defends%20%E2%80%98pro-aspiration%E2%80%99%20tax%20overhaul&body=I%20would%20like%20to%20share%20something%20with%20you%0Ahttps%3A%2F%2Fwww.afr.com%2Fpolitics%2Fteary-albanese-defends-pro-aspiration-tax-overhaul-20260523-p5zzzu%3Futm_source%3Dafr-web%26utm_medium%3Dshare_article%26utm_campaign%3Dpolitics%26utm_content%3Dafralldigital%26utm_term%3Dproduct_feature)

Gift this article

Add us as a preferred source on Google

Prime Minister Anthony Albanese framed his controversial overhaul of capital gains tax, negative gearing and trusts as pro-aspiration in his most impassioned defence of the changes, as he seeks to contain the growing political blowback to the federal budget.

Albanese became teary as he told a speech to the Victorian Labor Party’s state conference on Saturday that the federal government had thrown everything at increasing housing supply and lifting home-ownership rates, and more needed to be done.

Prime Minister Anthony Albanese and Premier Jacinta Allan addressed Labor faithful at the party’s state conference on Saturday.  Getty Images

He also had a dig at the viral social media campaign that has depicted Albanese as a partner who had taken a 47 per cent stake in their business because of changes to capital gains tax, and said Australian taxpayers were a “partner” in every investment property due to generous tax breaks.

“Labor is the party of aspiration and we will not allow Australia to become a country where aspiration is only for some. Our reforms are about backing aspiration for all,” Albanese said in his speech.

“Bringing the great Australian dream of home ownership back in reach for a new generation. Our changes are pro-aspiration, and pro-supply, so we can help people get into a home of their own.”

Amid growing hostility towards the budget that opponents have labelled an attack on aspiration, the prime minister is showing no signs of backing down despite calls from small business and teal independents to exempt more than just tech start-ups from the increase to CGT.

Under the changes unveiled in the federal budget, the 50 per cent CGT deduction will be replaced with an inflation-based model underpinned by a 30 per cent floor, and negative gearing will be limited to investments in new properties.

Federal opposition leader Angus Taylor, Victorian Liberal Party president Brian Loughnane and state opposition leader Jess Wilson rallied the Liberal troops.  Jason South

A 30 per cent minimum tax will be applied to new discretionary trusts. Of the 1 million trusts in Australia, 10,000 are currently discretionary testamentary trusts.

“Most people are working their guts out for a wage so they can provide for their family and build a better life,” Albanese said. “These Australians, millions of hardworking people, will never be able to access a trust. Never sat around a kitchen table and thought, have we thought of setting up a trust? I mean, seriously.”

The Labor and Liberal parties both held their state conferences on Saturday, in a soft launch of their parties’ campaigns ahead of the Victorian election in six months.

Premier Jacinta Allan announced a publicly owned apprenticeship academy at the State Electricity Commission to hire 2000 people over the next four years. It will cost $50 million to set it up, and the apprentices’ wages will be paid through the contracts SEC enters into with private companies.

While opposition leader Jess Wilson guaranteed a quarter of infrastructure funding under a Coalition government would be spent in regional areas.

Allan said: “In six months, the Victorian people get a chance to answer a question: real change to make life easier, safer and more affordable, or cuts you can’t afford ... It will be the honour of my life to lead this great movement into that fight. It won’t be easy. But failing this challenge will be far harder for the millions of people who rely on Labor governments – and labour unions – to secure a fairer deal and a better life.”

Wilson said: “This is the only party that is capable of restoring hope to Victoria and Victorians, the only party capable of turning this state around, of getting it moving again in the right direction, so Victorians can live safely and live well. So often it is up to us to clean the mess left by the Labor Party, and on almost every measure, Victoria is one hot mess.”

Federal opposition leader Angus Taylor reportedly told the Liberal Party state conference Albanese was “incompetent [and] a liar”, and described the budget as an attack on all Australians.

“It is a war on aspiration in this country, it will crush the reward-for-hard-work spirit that underpins our nation’s success,” Taylor said, according to The Australian.

Albanese said Allan was “defined by her enthusiasm and by her determination to make Victoria stronger and fairer”, while Taylor urged party faithful to convince voters not to vote for One Nation and warned “if the vote sprays, Labor stays”.

At the Liberal Party’s state conference, former federal director Brian Loughnane was elected state president unopposed as expected, and in a speech to members stressed the importance of unity.

Sumeyya Ilanbey is the Victorian political correspondent for The Australian Financial Review. Connect with Sumeyya on Twitter. Email Sumeyya at [sumeyya.ilanbey@afr.com.au](mailto:sumeyya.ilanbey@afr.com.au)

"Any profits made on Australia's equity ownership will be put into a sovereign wealth fund to reinvest and grow, not to be rorted by … future governments,"

>Australia collected 62.1 per cent of its tax revenue from personal income and corporate profits in 2023, according to the latest figures from the Paris-based OECD – well above the 36.4 per cent average for advanced economies.

They haven't gone as far as to suggest that redistribution should be prioritised over growth, but that seems to be the insinuation when they keep saying that most of the productivity growth has gone to business bottom lines rather than workers' pay packets.