As I mentioned on Monday in my post about Crime Rates, we love a good survey here on BobinOz. But what makes us laugh like a drain is a really bad survey.
A Really Bad Survey
Australian cities amongst most expensive in the world are the kind of shock horror headlines that greeted any of us Australians who cared to dig too deeply into the news today.
I read about it in the Courier Mail, their heading was “Brisbane one of world’s most expensive cities.”
It is, of course, all poppycock, as I explained last time the Economist Intelligence Unit came out with their survey. I fully explain why this survey is complete twaddle in my post, and you can read it by clicking this link, called Australian Cities: Most Expensive in the World?
But if you don’t want the full explanation, here’s a quick one.
The Economist Intelligence Unit calculates the cost of living in each city in the whole world by how much it would cost to buy things, like a loaf of bread, using US dollars.
To buy things in Australia, where we sell stuff in Australian dollars, first you would have to exchange your US dollars into AUD.
Here’s a quote from the article mentioned above…..
“The cost of living in Brisbane was 35 per cent cheaper than that of New York a decade ago,” Worldwide Cost of Living report editor Jon Copestake said from London. “Now it is 28 per cent more expensive, having almost doubled in a decade. In US dollar terms the cost of a loaf of bread has risen by 150 per cent….”
Source: Courier Mail
I decided to visit Reuters and take a look at currency exchange rates for today and from a decade ago. Here’s what I found:
- 1 USD = 0.93 AUD – Today
- 1 USD = 1.97 AUD 1st January 2002
Do you need me to say any more? Okay, I will.
Over the last decade, the buying power of the US dollar here in Australia has plummeted to less than half of what it used to be 10 years ago.
Now go back and read Jon Copestake’s quote above and see how meaningless it is to everyone except, perhaps, someone from the US who is thinking of having a holiday here in Australia.
The bottom line is this. The Economist Intelligence Unit seem to be suggesting that the stronger the Australian dollar becomes against the US dollar, the more expensive it gets for Australians, earning Australian dollars, living here in Australia.
Last time I wrote about this survey, I asked at the end of that post if anybody could explain to me the point of it all. Nobody did, but I have since found out.
In fairness to the Economist Intelligence Unit, their survey does have a point. It is to assist human resources managers to correctly compensate their workers when sending them to other countries to work.
Yes, I can see how it can assist with that.
My gripe with them though is that you have to read the ‘small print’ to understand that. Even their headlines claim to reveal which are the most expensive cities to live in and which is the cheapest.
But they don’t, do they?
This survey is more likely to tell you which currencies are strongest against the US dollar and which is weakest.
Unfortunately the media get hold of it and create sensational but misleading headlines which are supported by ridiculous quotes from people like the guy I mentioned above.
Don’t be fooled, Australia isn’t as expensive as some people are suggesting right now. Unless, of course, you’re coming here on holiday from the USA.