Page 5499 - Week 13 - Wednesday, 17 November 2010
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The Greens have consistently advocated for policies and outcomes that help those most in need. No-one likes the cost of a non-discretionary expenditure to rise. Unfortunately, these price rises are inevitable. As long as we live in an economy predicated on growth and a level of inflation, it is a fact of life. The real issue is not what has happened to a few select expenditure items, but what is our position overall, both in a contemporary sense and in a positional sense for the future challenges that are fast approaching. Some items will increase, some will decrease. Looking at a few measures in isolation does little to paint the real picture of the cost of living.
The Australian Bureau of Statistics also publishes the analytical living cost index, which goes beyond the headline CPI, and measures how much would after-tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in the base period and breaks the finding down into four different household types.
If you look at it in the September quarter of 2010, changes in living costs ranged from a low of 0.9 per cent for age pensioner recipient households and self-funded retiree households, to a high of 1.2 per cent for employee households and other government transfer recipient households, while the consumer price index rose by 0.7 per cent over the same period.
Since the series began in the June quarter of 1998, changes in living costs for each household type have historically tracked closely to the CPI. The living costs of other government transfer recipient households showed the highest increase of 49.2 per cent, followed by age pensioner households, which increased by 47.4 per cent. Employee households increased by 47.1 per cent, slightly higher than the 43.2 per cent increase in the CPI. The living costs of self-funded retiree households increased by 42.9 per cent. The cost of living increase experienced by some households was actually less than the CPI and for others it was between a 3.9 and six per cent increase.
The ABS explains these differences as attributable to a range of factors, including the inclusion of mortgage interest and consumer credit charges, which has a significant impact for employee and other government transfer recipient households. The inclusion of mortgage interest and consumer credit charges and the different treatments of housing and insurance also result in variations, and we can see that in the figures. The expenditure patterns for those households measured by the ALCIs differ from those of the overall household sector covered by the CPI. This also contributes to differences in the percentage changes. The point to take away is that the cost of living has not risen much above CPI at all over the past 12 years, which, of course, extends beyond the life of this government.
The other obvious factor to consider is changes in wages. Since 2001, ordinary average full-time weekly earnings have increased by 54 per cent. Overall, this means that financially, on average, people are actually better off now than they have been before. The Greens’ concern is that, while we can say this for the average person, it does not capture those who fall below the average. These are the people who are in significant need and who we should be focusing our assistance initiatives on.
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