Tuesday, November 24, 2009

I work. The crisis has left me better off

What was it Kylie said?

It's been a great financial crisis in which to have a job. The latest especially-tailored "employed persons" cost of living index shows the prices facing Australians who had jobs actually fell 1 per cent in the year since the collapse of Lehman Brothers in September 2008.

It's the biggest fall in the decade since the figures have been compiled.

By contrast the living costs facing age pensioners climbed 2.4 per cent and those facing self-funded retirees climbed 1.6 per cent.

Employed Australians have benefited from the big reductions in mortgage interest rates and petrol prices that flowed form the crisis.

Financial charges and transport costs are much less important in the budgets of retirees, making up only 16 per cent of the costs faced by aged pensioners compared to 25 per cent of those faced by Australians with jobs...

The Bureau of Statistics says employed Australians also benefited from the cheaper overseas travel and sliding costs of electronic equipment that flowed from the higher Australian dollar.

By contrast aged pensioners had "a relatively higher proportion of expenditures on electricity, house repairs and maintenance, property rates and charges and health services - all of which recorded large annual increases".

Other beneficiaries including the unemployed faced a living cost hike of 1.6 per cent "mainly due to increases in rents, electricity, insurance and tobacco".

Alcohol and tobacco are much more important in the budgets of beneficiaries than employed Australians, accounting for one in every 10 dollars of the living cost of Australians on welfare compared to one in every 12 of the cost for Australians with jobs.

Self-funded retirees were hit hardest by increases in the prices of electricity and water, medical services, insurance and house repairs.

During the financial crisis the four different living cost indexes have been as far apart as they have ever been, but have been moving back together in the most recent quarter with each increasing by around 1 per cent between June and September.

The Bureau was advanced $18 million in the May Budget to refine the pensioners and beneficiaries index used to assist in calculating pension increases.

It has also begun work on perhaps the ultimate tailored statistic, a personal inflation rate which would vary according to the spending pattern of the person who used it.

Users would key in monthly spending on things such as food, alcohol, newspapers and transport as well as annual spending on insurance and air travel and longer term spending on appliances to calculate how their own cost of living had changed.

It is displaying a mockup of the calculator on its so-called "BetaWorks" website.

The ups and downs of financial crisis

Living costs one year on

Employed Australians:
down 1%
Aged pensioners:
up 2.4%
Other beneficiaries:
up 1.6%
Self-funded retirees:
up 1.6%

Transport and finance make up 25% of an employed Australian's budget; 16% of an aged pensioner's budget

Source: ABS Analytical Living Cost Indexes, September 2009, Pensioner and Beneficiary Living Cost Index, September 2009

Published in today's SMH

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