BEN HARVEY: Why Anthony Albanese and Jim Chalmers are making a comfortable retirement a fantasy for many

Jim Chalmers and Anthony Albanese are making it ever harder for us to attain the life goal of being one of the people in the picture above.

That is, a care-free retiree enjoying their golden years after a long working life.

If the picture looks familiar it’s because you have seen it 1000 times in ads for retirement villages, financial planners, life insurance companies and superannuation funds.

He always looks like the slightly older (but still dishy) brother of a movie star. She bears a striking resemblance to Farrah Fawcett or Jane Fonda when they were in their mid-60s.

Both have just the right blend of salt and pepper in their hair, which is being gently tussled by a breeze as they stroll along the beach, usually with a golden retriever next to them splashing in the surf.

They’re happy and healthy, with just enough twinkle in their eyes for you to think they’re about to duck behind the nearest sand dune for some afternoon delight.

This fictional couple is designed to make us think “they’re getting on, but they aren’t decrepit. I want to be that person when I’m a bit older!”

It’s all bollocks of course.

In real life, the reason they’re on the beach is likely because he has dementia and has wandered away from the car.

She’s tried to run after him but her freshly replaced left hip is giving her hell and she left the Voltaren in the car.

And if they do stray into the dunes it’s not for a little nooky; it’s because the old boy’s grapefruit-sized prostate is forcing his fourth wee that hour.

Oh, and want to know why the dog’s staying in the water?

It knows its owners have run out of money and have already eaten the cat.

The image is a fairytale but it’s nice to have life goals so let’s not pull it apart anymore and get to the point of this column: the Federal Government seems determined to make sure this halcyon scenario eludes us.

The reluctance to do anything to rein in inflation is killing our retirement dreams. This economic force is poisonous for everyone but particularly insidious for those who have stopped working because it erodes nest eggs.

With little ability to top up their superannuation, retirees are forced to watch helplessly as the purchasing power of their life’s work drops. It’s an emasculating feeling and one being endured by millions of Australians right now.

This week’s depressing revelation that the runaway consumer price index is well outside the 2 to 3 per cent comfort zone should worry all of us but retirees disproportionately so.

The inflation genie is a stubborn bastard who is reluctant to get back in the bottle — not that you’d know that from listening to the Prime Minister and his Treasurer over the past few months.

“There are some economists, perhaps some in this room, who thought that you couldn’t get any inflation down without getting unemployment up,” Albanese told us in August. “Well, that’s not my Government’s way.”

A month before, that Chalmers bragged about how “we’ve got inflation much lower, sustainably within the Reserve Bank’s target band”.

And a few weeks prior to those confident words, the Treasurer crowed about “inflation lower than two-and-a-half” being something no advanced economy had achieved.

They must have known they were speaking too soon but they couldn’t resist taking the high mark at the first opportunity.

Most problematic is the evidence that energy is the primary driver of the current inflation drama.

The cost of energy is baked into everything so this inflation wave will spread like a yeast infection through the price tags of every good and every service.

Headline inflation jumped to 3.8 per cent in October, up from 3.6 per cent in August.

That’s bad. What’s worse is the spike in underlying inflation, which strips out one-off price aberrations. That was 3.3 per cent.

That high underlying figure suggests energy costs aren’t transitory outliers; they’re here to stay.

Government subsidies hid this hard truth. Now, with most budgets drowning in red ink, politicians can’t afford more financial sleight of hand.

When Queensland scrapped its $1000-a-year rebate and WA stopped its $400 annual subsidy, prices went up.

Shocking.

The Liberal Party is predictably blaming green energy for the price hike but don’t be lulled into a false sense of security about fossil fuels bringing costs down; juice is going to be a lot more expensive regardless of its provenance and regardless of who is in the Lodge.

Australia now risks the nightmare scenario of rising interest rates and rising unemployment and falling house prices.

You can survive the first two as long as you don’t have the last one. To understand why, imagine you’re a Federal public servant and you’ve just bought a house.

You stretched to six-times earnings to get it, reluctantly, but you couldn’t find anywhere to rent, so what choice did you have?

Credible economists are saying this week’s inflation figures could trigger not one, but two interest rate rises.

They will hit the economy as the banking regulator puts a handbrake on lenders, restricting the size of loans they can issue.

If the cost of finance goes up and finance is harder to get, the housing party will stop.

And that bureaucrat in Canberra, having bought in at the top of the market, is going to be left with negative equity.

That’s fine, albeit frustrating, as long as he or she can keep paying the loan.

But what if they lose their job?

That prospect is most definitely on the table as the Government moves to rein in a budget that’s out of control, ironically, because Canberra spent so much money on things like electricity rebates

If that scenario plays out, then our public servant has a very big problem. No job means no loan repayment, which means foreclosure.

When you lose your house owing more than it is worth, you still have debt.

You’re paying a loan on a house you don’t have, using money from a job you recently lost.

And you still need to find somewhere to rent.

Don’t worry about walking along the beach at sunset in your retirement; you’ll be sleeping in the dunes and fighting the dog for the last bit of PAL.