We’re facing a tough reality: the Iran\/Israel\/US conflict is casting a giant shadow over our daily lives in Geelong, impacting our community in ways we can’t ignore.<\/p>\n
Inflation is predicted to hit 6 per cent over the next few weeks but let’s stop pretending we have nothing to do with it. We are being consumed by opportunistic greed, and we need to collectively take a step back and grow some resilience.<\/p>\n
Fuel prices have risen by 50-60 per cent, if you can get it.<\/p>\n
A standard freight truck that may use 500 litres per week, is costing $1,550 per week to fuel up ($3.10 per litre) where previously it cost $950 per week, an increase of $600. What we are seeing though, is that the one-off $600 delivery cost increase is being applied as an (up to) 30 per cent retail price increase labelled by the retailer as a “fuel surcharge” on the tens of thousands of dollars of goods delivered by that one truck.<\/p>\n
I am also thinking that lots of goods sitting in warehouses, that were purchased and freighted before the soaring fuel prices of the past month, have hit the shelves with a “fuel surcharge” added to the price. I really hope that this isn’t the case.<\/p>\n
Let’s take a look at some greedy gouging examples.<\/p>\n
A major national supplier has increased the costs of PVC pipes by 30 per cent. So, let’s say a truck carrying 500 lengths of 6m PVC pipes, that originally cost the consumer $35 per length, now costs $55 per length. The additional profit on that truck load is $10,000 ($20 per pipe). Now factor in that most PVC is being imported and it takes a ship six weeks to get here from wherever it was manufactured. Hence, that load of pipes was purchased more than six weeks ago, at pre-crisis pricing. So don’t tell me that it is the cost of imported goods that is causing these price hikes!<\/p>\n
Let’s talk about grocery bills and use the example of the humble tomato.<\/p>\n
The ABC reported that wholesale vegetable buyers are paying 5 per cent more for produce, to cover the additional costs of fuel, fertiliser and freight. But farmers say they are absorbing most of the costs, passing on only about 12 per cent of that 5 per cent. However, the cost of a tomato at the supermarket has risen by 10-15 per cent.<\/p>\n
In this case, the supermarkets are again winning by paying a smaller surcharge at the wholesale level and charging consumers a higher surcharge at the counter, and this is across most grocery items.<\/p>\n
I work with many construction trades. Many have signalled to me that prices will go up due to fuel costs. And I am left scratching my head as to why a guy who charges out at $100 per hour, travelling perhaps half an hour each way to work, needs to increase his fees by 5-10 per cent or about $400 per week, when I am well aware his fuel bill has only gone up about $100 per week.<\/p>\n
Small businesses are screwing each other over and citing fuel prices as the excuse.<\/p>\n
It’s not just corporate greed; it’s greed at every level. As a society, we are taking the piss.<\/p>\n
We did the same thing during COVID. The suppliers led first, putting up costs; then the trades came second; the sparky put his costs up; then the chippy; then the plumber. When I asked them why at the time, the chippy said “I did it because the sparky did”.<\/p>\n
The major flow-on issue is that it then becomes the norm, and I’ve very rarely seen prices return to pre-crisis levels. We lie to ourselves and call it inflation, but really it’s greed. And as a society, we are guilty of it. And it’s not just in construction.<\/p>\n
I’ve seen emails from accountants and lawyers indicating their hourly rates will increase due to a fuel surcharge. We need to collectively check ourselves before we wreck ourselves.<\/p>\n
If we all run around using every crisis as a reason to put prices up, we just make life harder and harder for ourselves and our kids.<\/p>\n
This week I met with executives from a major bank. We discussed the construction projects the banks are funding across the country, and they are rightly worried.<\/p>\n
These increased construction costs will mean that many of the existing projects underway will now run at a loss or be shut down. Projects that were about to start are being put on hold or cancelled. As this risk increases, funding for development will become harder to obtain.<\/p>\n
This will have a roll-on effect. Housing supply will continue to decline, and in a few years it will be almost non-existent.<\/p>\n
In a market where we are already grossly undersupplied, brace yourselves: house prices will skyrocket. Again, making it harder and harder to own a home and making life that bit harder for all of us.<\/p>\n
I am hoping this crisis moves past us quickly, but in the meantime, how about we all take a collective breath and each apply a little more resilience and a little less greed? Sure, put up your prices to cover the new costs, but please don’t take advantage of your fellow Australians.<\/p>\n