A new defense pact between Australia, Britain and the U.S. will see Australia acquire up to five U.S.-made nuclear-powered submarines for $200 billion, which means each Australian taxpayer will have to pay around $13,000. This is a huge expense for just a few boats, equivalent to buying a new small car for every Australian.
On Tuesday, Prime Minister Anthony Albanese will reveal the huge financial burden of the submarine deal on taxpayers, promising to be honest about the risks of the 30-year agreement. The deal, which could cost more than $200 billion, will require each taxpayer to pay about $13,370 for the fleet of up to five nuclear-powered submarines from the U.S. and the U.K. This is based on the number of taxpayers in 2019-2020, which was 14.9 million.
Australia is facing a cost-of-living crisis as inflation surges to its highest level in more than three decades, hitting mortgage borrowers, low-income earners and renters the hardest. According to the latest data from the Australian Bureau of Statistics (ABS), consumer prices rose by 7.8 per cent in the fourth quarter of 2022, compared to a year ago, driven by soaring costs of food, fuel and housing. This was the highest annual inflation rate since the first quarter of 1990, when it reached 8.1 per cent.
The inflation spike has outpaced wage growth, which was only 2.3 per cent in the year to November 2022, leaving many Australians struggling to afford basic necessities and maintain their living standards. Mortgage borrowers have also faced higher interest rates as the Reserve Bank of Australia (RBA) lifted the cash rate three times since November to curb inflationary pressures. The RBA has signaled that more rate hikes are likely this year, as it expects inflation to remain above its target range of 2-3 per cent until at least 2024.
Some groups are more vulnerable to the cost-of-living squeeze than others, such as low-income earners, who spend a larger share of their income on essentials like food and energy, which have risen faster than other items. Renters have also faced steep increases in housing costs, as the national median rent rose by 14.6 per cent in the year to December 2022, according to CoreLogic data. In contrast, homeowners have benefited from rising property values, which increased by 15.9 per cent over the same period.
It is alarming and unjustifiable for the current Prime Minister to commit to the nuclear submarine deal, which will squeeze Australian taxpayers and citizens even more in this period of high inflation.