A Lolly Story
Imagine there’s a little lolly shop right on the corner of your street. It’s the best place in the world! Usually, everything stays the same. A bag of lollies costs one shiny coin, and you know exactly how many you can get with your pocket money. It’s easy-peasy!
But every now and then, something strange happens. You go to the shop with your coin, but the shopkeeper says, "Sorry, little mate! Those lollies are two coins today." This is called inflation. It’s a very big word that just means your money has shrunk a little bit, it doesn't buy as much as it did yesterday.
Now, some grown-ups in suits like to point their fingers and shout. They say, "The Government is spending too much money! They are buying too many lollies at once, and now there’s nothing left for us!" They think the Government is like a giant kid who came into the shop and bought every single jelly bean, making the price go up for everyone else. But in Australia, especially over the last few years, that’s not really what happened. The story is a bit more like a big, messy puzzle.
The Sickness and the Stuck Ships
First, we have to talk about the "Big Sickness" called COVID. Remember when everyone had to stay home? Well, while we were all inside, the rest of the world got a bit "stuck."
Imagine the factory that makes your favourite lollies suddenly had to turn off its lights. Then, the big ships that carry the lollies across the ocean couldn't sail because the sailors were sick. When they finally did sail, they got stuck in long lines at the harbour. To make it worse, the trucks that bring the lollies to your street started running out of petrol, and the petrol they did find was super expensive.
The truck driver knocks on the shop door and says to the owner, "I’m sorry, but it cost me a fortune to get here! I have to charge you double for these lollies just to pay for my fuel." This is what the experts call cost-push. It’s like a giant hand pushing the prices up from the outside. It wasn't because the Government bought all the lollies; it was because the lollies became a nightmare to deliver!
The House and the Power Bill
In Australia, we had some other tricky problems, too. Think about the roof over your head. Lots of people wanted to move into new houses, but we didn't build enough of them. When 100 people want to live in just 10 houses, the person who owns the house says, "I’ll give it to whoever pays me the most!" That makes rent go up and up, which makes families feel very poor.
Then there’s the light switch. To keep the lolly shop bright and the lolly fridge cold, you need electricity. But because of wars far away and changes in how we make power, the electricity bills started jumping like kangaroos! When the shopkeeper has to pay a massive power bill, they have to sell the lollies for more money just to keep the lights on.
Is the Government the "Bad Guy"?
Now, the Government did spend money. During the Big Sickness, they gave money to people so they wouldn't lose their homes or their jobs. Later, they helped families pay those scary electricity bills. Some people say this made things worse because it gave people more money to spend.
It’s a little bit true, like adding a tiny bit of extra wind to a kite that’s already flying high. But the Reserve Bank (they are like the referees of the money world) looked at everything and said the Government wasn't the main boss of high prices. The real bosses were:
Global Grumbles: Things like petrol and shipping costing more all over the world.
The Housing Squeeze: Not having enough homes for everyone to live in.
The Profit Push: Some big, giant companies kept their prices high even when they didn't need to, just to make extra treasure for themselves.
Payday Catch-up: Because milk and bread got so expensive, workers asked for a little more pay so they could buy dinner, which made things cost a tiny bit more again.
The Big Picture
So, if your lollies shop is more expensive today, don’t just blame the big spender in the corner. If the Government stopped spending all their money tomorrow, we would still have expensive petrol, we would still have high rents, and the ships would still be expensive to sail.
Australia is connected to the whole wide world by invisible threads. When something goes wrong far away, or when we don’t build enough houses here at home, the price of your lollies goes up. The Government is just one small part of a very big, very complicated story. Next time you hear someone blaming them for everything, just remember the lolly shop and the truck driver who couldn't find any petrol!
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