I have commented before on how expensive it is to live in Perth compared to other places. Over the past several months I have pondered this mystery and discussed it with several people who have grown up here. After piecing together the various bits of information I have gathered, I have a theory which might explain it. So here goes.
The first and most obvious element is taxes. The free health care system (ironically, it is called Medicare) is not available to people from countries who do not provide free health care to Australians who visit there. While this makes sense, it still hurts to pay for benefits you will never receive. Also, in 1992 Australia made saving for retirement compulsory, in a program called superannuation. Broadly speaking, it forces everyone who works to save a certain percentage for their retirement. It's similar to the USA 401(k) system, except that your employer also makes contributions to the fund. The idea is to help full-time workers save enough money to live in retirement. The Australian version of Social Security pays only 25% of one's salary.
So... taxes pay for benefits and pensions. Then add duty (for imported items) and transportation to get everything to this remote place. These costs make their way into the price of goods and services. We do well with food and alcohol, because most of it is produced locally, hence no duty and lower delivery costs.
Why does it cost so stinking much to live here? I personally think that the largest contributing factor is the high wages people are paid. When we first moved here, I found it amazing and frankly, rather irritating to know that someone with barely a high school education could earn as much money as I was earning, with a Masters degree and 25 years work experience. But... over time my opinion is changing. The concept of work-life balance is starting to make sense. (See my earlier blog entry on the subject http://vetteroo.blogspot.com/2010/01/not-quite-perfect.html )
The average Western Australian has the equivalent of a high school education. There is no expectation for people to go to University. Why not? Because there are plenty of great-paying jobs for people with skilled labor qualifications, and the apprentice system is alive and well. For example, house cleaners start at $18 per hour, and an inexperienced construction labourer starts at $17.50 per hour. It costs around $100 for someone to mow your grass (although with last year's dry weather, this service isn't much in demand). This is completely opposite the USA, where you can get your grass cut for $25-50, house cleaners earn closer to $10 per hour, and construction workers earn minimum age ($7.25 per hour).
People get paid a heck of a lot of money to work here. Minimum wage is $15 per hour, and the average Australian earns $28 per hour, or $1,124 per week.
Before you start packing your bags to move here, keep in mind that Australians pay significantly more income tax than the average American. High income earners (>80,000) pay 48.5% in income tax. So no matter how much you earn, you're going to give a big chunk of it back to the government. These taxes pay for the very generous government services here. While this is of great comfort to Aussies, expats who pay into the system do not receive benefits back except in a minor way, such as being able to use the library.
Why do Australian workers earn so much more than Americans? A couple of reasons. First, there is no class or race of people who are willing to work for so little. There are very few refugees here, and the foreign immigrants here are almost always more highly educated than Australians. The closest thing they have are Aboriginal peoples, but their spiritual and psychological makeup is completely unsuitable for working - they go walkabout, they can live on almost nothing, and working is not important to them. The only alternative is to pay people a living wage -- enough to provide an incentive to work.
Costs are high but so are wages, so an equilibrium is maintained. The result is that you can be a gardener, bricklayer or hairdresser here and support a family on your salary. You can be a waitress* and not depend on tips. There is a thriving work force and a healthy blue collar class of people who work hard and are proud of what they do. Like America in the fifties.
** No tips? See tomorrow's blog for more.
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