Australia’s cost-of-living crisis is concentrated on items people need most and driven by privatisation of essential services, analysis of two decades of Consumer Price Index data has revealed.
The McKell Institute findings, set to be presented at the annual NSW Teachers Federation conference in Sydney on Sunday, paint a stark picture of ever-rising annual inflation of everyday essentials between 2006-2026.
The research found that while the CPI ran at an average 2.9 per cent per year, the fastest-rising costs driving total inflation were all privatised services outside the public system or services formerly delivered for free or at a low cost by government.
Among those items was gas, which according to the McKell Institute’s analysis recorded an average annualised inflation of 5.9 per cent over the 20-year period.
Electricity, meanwhile, rose at an average of 5.7 per cent, while medical and hospital services reported an average inflation of 5.5 per cent.
Secondary education, in which multiple private operators are active, rose by an average of 5.2 per cent, water and sewage by 4.6 per cent, and, housing and preschool and primary school care by 3.9 per cent.
However, consumer goods, such as clothing, appliances, and computing equipment, got cheaper over the same period, according to the report.
McKell Institute economist Alison Pennington said the analysis exposed a “20-year transfer of income” from workers to private companies delivering essential services and contradicted prevailing narratives around the RBA’s rate rises.
“For two decades, the price of the things you need to exist has grown faster than everything else. Utilities, health, education and housing top the list, and every one of them was once delivered publicly, free or made affordable to average people,” she said.
“The RBA is worried about sticky domestic inflation and the debate keeps circling back to wages. Nobody is asking the obvious question: What happened to price stability when we handed essential services to for-profit providers?
“The answer is in the data. Rising out-of-pocket costs driving economy-wide inflation. Rebuilding public provision and a stronger role for government regulating prices is critical to addressing painful inflation, macroeconomic instability, and to boosting living standards.
“This is how you fight inflation in the interests of everyday people, not through rate hikes.”
The RBA left the cash rate unchanged at 4.35 per cent last month following three consecutive hikes earlier in the year.
Speaking on its May hike, the RBA said developments in the Middle East were starting to impact prices off the back of high inflation recorded at the start of 2026.
A fire sale of Australia’s gas industry took place largely in the ’90s, with state governments – including the Kennett government in Victoria – selling off distribution and pipeline assets.
Other assets, such as water and sewage, are largely managed by state-owned companies rather than full privatisation, including Sydney Water.
Schooling enrolments, meanwhile, have risen at Catholic schools (up 5.7 per cent between 2021-25 according to the Australian Bureau of Statistics) and independent, non-government schools (15.3 per cent).
By contrast, government school enrolments as a percentage fell by 0.4 per cent over the same timeframe.
NSW Teachers Federation president Henry Rajendra said the findings showed the pressure on working households was a government policy choice.
“Teachers see the consequences of this every day. Families in our school communities are being squeezed by the rising cost of the essentials,” Mr Rajendra said.
“The data also shows education fees in the private system are among the fastest-growing costs in the entire economy, feeding the same inflation the RBA keeps punishing workers for.
“The answer is clear: A strong public education system holds down costs for every family in this state.”
The NSW Teachers Federation is one of Australia’s largest teachers unions and has long lobbied state and federal governments to take action on wages and cost of living.
