inflation Spiral Getting Worse

Northern Advocate, 19 October 1949, Page 5

inflation Spiral Getting Worse

SYDNEY, Tue. (11 a.m.).— The financial editor of the Sydney Morning Herald says that the latest increase in the basic wage, which is the fourth this year, is an indication that the inflationary spiral is getting out of hand. He adds that the increase of 2/- a week will be quickiy absorbed by taxation and the rising costs of goods and services.

Since January the basic wage, which is based on the price index and which; in Australia, affects the majority of incomes in both the upper and lower groups, has risen 10/- a week. The new rate varies from £6(5/- in Brisbane to £6/12/- in Sydney. The latest increase is expected to add £376,000 to the New South Wales Government’s wage bill for the remaining eight months of the financial y, ' d ‘ SIGNIFICANT FEATURE The Herald’s financial editor comments: “Is is significant that the pound has lost more of its power to buy goods during the last two years than in the most inflationary years of the war. “A certain effect of each basic wage increase is to raise the cost of living "Then follows another wage increase, with just as little benefit to the wageearner. “It is rather like a man trying to raise himself by the bootstraps.” Though 2/- a week will be added to most salaries, in theory the higherincome brackets will not receive this amount, as taxation will claim its share. The increase, comnuted quarterly by reference to variations in the price index, is added to nil wages and salaries fixed by awards. THE WORST OFF This includes incomes of £750 a year Worse off are those not covered by awards, who receive no compensation whatsoever for rises in the cost of living brought about by increases given other wage-earners. It is computed that since September 1939 .about 7/TO has been cut from the purchasing pouter of the Australian pound. This does not take into account the forthcoming increase in living costs as the result of devaluation of the pound against the dollar. Most of this change has come about in the past two years. RAPID RISE The cost of living has risen so rapidly in the past two years that £] a week has had to be added to the basic wage. In the previous two years the increase was 6/-, together with V- a week granted by the court. The basic wage for Sydney in 1939 was £4/2/-, since when it has risen £2/10/-,