Sunday, September 17, 2017

Chill. Electricity isn't that expensive, really

So you reckon you're paying too much for electricity. What if I told you that at the latest official count you spent no more on it than you would have in 1984?

Back then the expenditure survey showed the average household spent 2.9 per cent of its budget on electricity and gas. Three decades on, in the updated survey released this week, the figure is unchanged: 2.9 per cent.

Electricity and gas amount to just $41 of our total weekly spending of $1425.

So why the anguish? The size of the bill has been climbing (it had fallen as low as 2.6 per cent) and it climbed further in July, after the survey was conducted.

But even so, it isn't particularly big and it hasn't climbed dramatically. Compare it to "communication", a category that encompasses phones and the internet. That amounted to just 1.8 per cent of household spending in 1984. Now it's almost double: 3.3 per cent; bigger than electricity.

Compare it to housing. Rents, rates and mortgage payments amounted to 12.8 per cent of household spending in 1984. Now they're 19.6 per cent. Combined, the increases in what we are spending on housing and communications are three times what we're paying for energy.

And we're (apparently happily) spending more on other things as well. Education made up just 0.9 per cent of spending in 1984. Now it's three times that, and more than electricity at 3.1 per cent. In the early 1980s university was free and only one quarter of us sent our children to private schools. Now it's more than one third.

We spend more on health, up from 3.9 per cent to 5.8 per cent. It's now twice what we spend on energy. Some of it is because we are getting older. The above 65s spend 8.3 per cent. The above 75s spend 11 per cent.

And just about everywhere else we are spending far less. Food took up about 20 per cent of our budgets in 1984. Now it's 17 per cent. Alcohol has dwindled to 2.2 per cent, tobacco to 0.9 per cent. The money we've saved on those three combined are twice what we pay for electricity.

We're saving more than our entire energy bills on shoes and clothes. Their share of spending has halved from 6.5 per cent to 3.1 per cent. And we're saving more on household furnishings. Their share has shrunk from 7.7 to 4.1 per cent. We're even saving on transport. Fares, tolls and fuel are now 14.5 per cent of our budgets, down from 16.3 per cent.

So why the anguish about electricity? Why is the prime minister concerned that the bills could bring him down? It could be because, unlike communications bills, we can't see what we are getting for electricity bills. Since 1984 our communications spending has given us the world wide web, Snapchat and mobile phones. It's the same with houses. They're bigger than they were, and their rapidly rising prices buy increasingly valuable nest eggs. Bigger education bills buy us slots in private schools, which for some reason more and more of us seem to want.

It could be because electricity is invisible: like petrol, a grudge purchase. And it could be because we've become dramatically sensitised to its price. Until recently we didn't much seem to mind. For more than a century through two World Wars and the Great Depression we consumed more of it each year than the year before. Then from 2010 (well before the introduction of the carbon price) the price became suddenly visible, and for the first time in living memory we cut back.

Tony Abbott had sounded the alarm about a "great big new tax on everything". The Sunday roast was going to cost $100, Whyalla​ was going to be wiped out. Politics became about electricity prices. And it didn't stop.

In The Age and Sydney Morning Herald