Wednesday, September 07, 2011

The softly-spoken good news. Our power bills are no worse:

Six years of spending

Rising share of wallet

2003-04, 2009-10

Housing costs 16.1% 18.0%
Restaurants and cafes 2.1% 2.6%
School fees 1.0% 1.6%
Childcare 0.54 0.72
Internet connection 0.3% 0.6%
Pay TV connection 0.3% 0.4%
hairdressing 0.16% 0.19%

Steady share of wallet

Transport 15.6%
Household fuel and power 2.6%
Alcohol 2.6%

Shrinking share of wallet

2003-04, 2009-10

Household furnishings 5.8% 4.7%
Clothes and shoes 4.0% 3.6%
Petrol 3.36% 3.09%
Tobacco products 1.3% 1.0%
Fixed phone charges 1.86% 1.19%
Mobile phone charges 1.0% 0.98%
Bread 0.67% 0.57%
Milk 0.6% 0.5%
Books 0.45% 0.38%
Newspapers 0.30% 0.22%
Pokies and lotteries 0.09% 0.07%

ABS 6530.0, Share of total household expenditure

You wouldn’t believe it to listen to our politicians, but household fuel and power bills eat up no more of our wallets than they did six years ago. And petrol eats up less.

The only comprehensive survey of household spending - conducted once each six years by the Bureau of Statistics - finds domestic fuel and power accounted for 2.6 per cent of our spending in 2009-10, 2.6 per cent in 2003-04 and 2.6 per cent two decades earlier in 1988-89. At times it has been higher - 2.9 per cent was the peak, but for most of the time it has been where it is now - at 2.6 per cent.

Petrol, another necessity about which we complain takes up less of our wallets, accounting for 3.09 per cent of household spending, down from 3.36 per cent.

The imposts are steady or shrinking because our wallets are growing. Household income has climbed 50 per cent since 2003-04; way ahead of prices which have climbed 19 per cent.

We haven’t spent all the extra income, we’ve tucked some away. Spending grew 38 per cent.

Most of the staples cited as causes of concern at the last election are easier to buy. During the pre-election debate Tony Abbott said he was worried about the price of groceries, particularly bread. Bread accounts for less of our spending than it did, sliding from 0.67 per cent to 0.57 per cent; food has slipped from 17.1 to 16.5 per cent.

The big unavoidable expense that is costing us more is housing, whether paid for by a rent or mortgage. Housing now accounts for 18 per cent of total spending, up from 16 per cent six years ago and a new record high...
School fees are also biting harder along with childcare fees.

Other increased spending reflects changed lifestyles. We are spending more of our wallet at cafes and restaurants than six years ago, up from 2.1 per cent to 2.6 per cent. We spend more at hairdressers, more on pay TV and roughly double what we did on internet connections.

Surprisingly we are spending less of our wallets on mobile phone calls as prices come down, and less on fixed phone calls as we make fewer of them. Lower prices mean we are spending much less on clothes and shoes - down from 4 per cent of the national wallet to 3.6 per cent and also much less on household furnishings.

Melbourne residents remain a good deal more likely than Sydneysiders to lash out on clothes and furnishings. In 2009-10 the typical Melbourne household spent 4.1 per cent of its budget on shoes and clothes, the most in the nation. Sydney households spent 3.9 per cent and households in temperate Perth 3.5 per cent. Melbourne households devoted 4.9 per cent of their budgets to furnishings, Sydney households 3.7 per cent.

Much of the difference appears to be the result of housing costs. It takes 20.7 per cent of a Sydney income to pay for expenses such as mortgages and rent, only 17.7 per cent of a Melbourne income, the third lowest in Australia before Canberra and Hobart.

Away from Melbourne housing expenses are even lower. The regional Victorian figure of 15.2 per cent is equal to that in regional NSW and the lowest in the nation.

And we are spending less on vices. Poker machine and lottery expenses have fallen from 0.9 to 0.7 per cent of household income, tobacco products have slipped from 1.3 to 1 per cent. Alcohol remains unchanged at 2.6 per cent, which is coincidentally the same proportion we spend on fuel and power bills.

The Bureau will use the results to update the composition of the consumer price index.

Published in today's SMH and Age

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The Lorax said...

I swear my internet costs less today. I certainly get vastly better value (10x faster, unlimited usage, bundled with VoIP) for the same price or less in dollar terms. Certainly less in real terms.

I have a hard time believing the numbers on electricity bills. Don't get me wrong, I think we should all be paying more for (coal-fired) electricity, but looking back through my old bills I'm already paying 40-50% more than six years ago.

Bruce Bradbury said...

TL: The ABS does show average household expenditure on domestic fuel and power rising by about 38% over the 6 years - which is not that far from your observation. However total expenditure has risen at the same rate due to both inflation of 19% and real income growth.

As for the internet, the survey records total spending rather than prices. So most of the change is due to more people having internet connections.

Peter Martin said...

And we completed the move away from dialup to broadband.

The Lorax said...

BB: I'm in the slow lane of the 2 speed economy, so my income has been falling (rapidly) in real terms. So I'm definitely paying a greater share of my income on electricity than I did six years ago. Not that its a bad thing -- electricity has been massively underpriced for decades in Australia.

As for internet, yes the difference is probably people paying for mobile internet on smartphones and tablets, as well as their fixed-line broadband at home.

PM: But is broadband in 2011 any more expensive than dialup in 2005? IIRC, dialup was about $30/mo in 2005, and today you can get ADSL2+ for the same price.

Marek said...

some of the comments on the age are hilarious.

I particularly like the ones that make a maths error and then claim they know how to count

Anonymous said...

I wonder whether there coordinated commenting going on in the website of The Age? It would be interesting to know if any analysis is done of it to see how many people regularly get in early, since only the first 10 or so comments probably get read by a lot of readers. It certainly is depressing reading. Most of the commenters would be more at home in one of Murdoch's echo chambers

Marek said...

good point anon, i never thought of that

The commenting system on the age is pretty poor, i can imagine that it's open to that kind of simple exploitation

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