Australia has become one of the most expensive countries in the world and consumers largely have the Government to thank, new research suggests.

Dr Oliver Marc Hartwich from the Centre for Independent Studies today released a report titled Price Drivers: Five Case Studies in How Government is Making Australia Unaffordable.

Bananas, books, cars, housing and retail are all areas where Australians are paying too much, according to Dr Hartwich.

"We are always told we are living in this miracle economy, the envy of the world, the one economy that survived the GFC, and it's all true, but ordinary consumers do not feel they are living in this blessed economy - they actually feel ripped off and overcharged," Dr Hartwich said.

In the case of bananas, the report notes that even before Cyclone Yasi, we were paying $2.30 per kilo, which is more expensive than in New Zealand, the UK, France and the US.

"Australians regularly pay more for their bananas compared to say a country like Germany where they don't even grow bananas," Dr Hartwich said.

He says given bananas are Australia's top-selling fruit and each person consumes about 13 kilograms of bananas a year, they should be allowed to be imported from the Philippines - even if only into non-banana growing states.

"The Australian banana industry is not actually that big. They make it sound like a really important part of the Australian economy when in fact it isn't," he said.

"It's an industry that is really focused in a few locations and employs a few thousand people, not tens of thousands, but then basically all the rest of the country - the other 22 million people - have to pay the price for that.

"I'm not against Australian farmers or against buying Australian bananas, but you need to have the choice.

"In the end you have to consider the needs of lower-income Australians. Why do they have to pay for farmers that are probably richer than them?"

Importing cars

On the car industry, Dr Hartwich says vehicles should also be allowed to be imported.

The report says the cost of cars in Australia and abroad often escapes public scrutiny because the industry is heavily protected against foreign competition.

But it says the price difference between cars in Australia and abroad can be enormous.

"My favourite recommendation from the whole report is to make it possible to import used cars from other countries," Dr Hartwich said.

"That's something New Zealand does regularly. New Zealand has specialised agencies that make it possible to import used cars from Japan, so it gets extremely good deals on used cars.

"Why shouldn't we get the same deals?

"One example is a top-end-of-the-market Mercedes we found here for $360,000 and in Britain you could get the exact same car for $110,000.

"That's a bit extreme, but even family cars you can easily save $5,000 to $6,000, and I think for a lot of Australian families that would make a big difference."

Housing affordability

The report does acknowledge that some costs of living are influenced by external factors, but it says government policies and regulations play a far greater role in driving prices than people realise.

When it comes to housing affordability in Australia, Dr Hartwich says government is almost entirely to blame.

The report states the price of a small apartment in Sydney or Melbourne would be enough to buy a reasonably sized family home in Berlin, Houston or Barcelona.

It also says the first home owner grant has made housing less affordable for the majority of Australians.

Dr Hartwich says there is no excuse.

"When we're talking about the housing situation, I think I would probably blame most of it on the government because that really comes down to how many houses are there, how much land is there to be released for development," he said.

"It's quite simple to drive down house prices, especially in a country the size of Australia.

"We've got so much land we could theoretically develop so there should never be a housing shortage in Australia."

Benefits

The report also says Australian retail is in crisis. It finds shop rents and CBD parking are over-priced and far more expensive than they are overseas.

Three-hour parking in Sydney costs more than in London and New York, while the average price for a cinema ticket in Australia ($12.98) is more expensive than in New Zealand, Germany and France.

It also examines the cost of books in Australia and notes the seventh Harry Potter paperback costs $21.95 compared to $6.95 in Canada.

Dr Hartwich says the report's recommendations to lower the cost of living are quite practical and if implemented would save Australians a lot of money.

But he acknowledges there would be opposition.

"Opposition would be fierce. Everybody who would lose would cry out loud. The big losers would be the established retail chains, farmers would resist it, the printing industry would resist it," he said.

"I would expect all of this opposition, but still, we are talking about special interest protection here and the vast majority of Australians would actually benefit from my changes.

"We would see a reduction in fruit and vegetable prices by about a third or a half, we would probably cut between $5,000 and 10,000 off the ordinary family car.

"If we managed to reduce house prices to their traditional levels, that would cut about $150,000 to $350,000 off your next house.

"Paying for books - you wouldn't have to get them from Amazon, you could just buy them form Dymocks and they would be the same price.

"Bananas, DVDs, whatever you want - it would come down significantly in price and would make an enormous difference for Australian consumers."

Blind spots

When Dr Hartwich suspected his report would attract opposition, he was right.

Dr John Quiggin from the University of Queensland's School of Economics says while Australia is certainly expensive at present, this primarily reflects the strength of the Australian dollar rather than government policies.

"Some government policies raise costs, but the selection of examples in this report suggests this is pretty marginal," he said.

"Only a minority of consumers are affected by the luxury car tax and banana prices are high only in the aftermath of a cyclone. The price has already fallen back below $2 a kilo."

He says Dr Hartwich does have a case in relation to house prices, but that the political difficulties of fixing this are immense.

"The proposals in the paper are worthwhile but reveal the author's own ideological blind spots and policy taboos," Dr Quiggin said.

"A sensible housing policy would start by removing the exemption of owner-occupied property from land tax, but the authors aren't willing to say this because it would raise objections from their political allies.

"This illustrates the difficulty of reform in this area."