progress Cities - dpac.tas.gov.au · consumer price index labour price index income and household expenditure survey ... While the Tasmania Together cost of living figures peaked

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COST OF LIVING IN TASMANIA

Companion Report 1 - APPENDICES

Analytical Living Cost Indexes for select Australian Household types

financial stress survey of general social survey income and

housing data consumer price index

labour price index income and household expenditure survey measuring price movement

low income measuring Australia’s

progress means equivalised disposable carers inflation

weighted average income and capital Cities

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Appendix 1

ANALYSIS OF ABS DATA

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TABLE OF CONTENTS

COST OF LIVING INDICATORS ......................................................................... 4

HOUSEHOLD EXPENDITURE ........................................................................... 13

Cost of Utilities .............................................................................................................. 16

Cost of Housing ............................................................................................................ 24

Cost of Transport ......................................................................................................... 42

Cost of Education ......................................................................................................... 52

Cost of Health ................................................................................................................ 57

Cost of Food ................................................................................................................... 64

Cost of Alcohol and Tobacco ............................................................................... 70

Recreation ........................................................................................................................ 76

INCOME DATA ........................................................................................................... 83

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Cost of Living Indicators Tasmanian average weekly earnings have increased 5.5% a year on average since February

20061, outpacing the average growth in prices for Hobart of 2.8%2. However, Tasmanians are paying significantly more for some essentials: housing (including rents, property rates and

charges, and utilities), health, education and food costs have all grown faster than average

earnings3. Rising transport costs have also contributed to the budget pressures being

experienced by many households.

Since March 2006, housing costs have risen 4.6% a year on average, health costs have risen

4.4% a year on average, education costs have risen 4.1% a year on average, and food costs

have risen 4.1% a year on average4.

AVERAGE ANNUAL GROWTH RATE, Selected household costs, Hobart, 2006-11

The cost of living in Tasmania has been steadily rising. Between 2002 and 2010, the

Tasmania Together cost of living indicator (1.1.1) showed a general steady increase

(=worsening), reaching a height in 20075.

In 2010, the cost of basic living essentials such as food, electricity, housing, transport and

health took up an estimated 92.0% of the welfare entitlement for an unemployed couple

with two children aged 6 and 12 years, leaving little room for emergency expenses or

savings. While this cost has declined from the 2007 high of 94.4%, over time it has risen steadily from 71.0% in 20026.

1 Australian Bureau of Statistics 2011, Average Weekly Earnings, Australia, Feb 2011, Table 11F: Earnings; Persons; Full Time;

Adult; Ordinary time earnings ; Tasmania (cat. no. 6302.0) 2 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 5 (cat. no. 6401.0) 3 Prices are from the CPI March 2011 quarter. The table does not reflect recent changes to some items, such as the

interim price order (IPO) made by the Treasurer for water and sewerage charges, which came into effect on 1 July 2011. 4 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0) 5 Tasmania Together Indicator 1.1.1: The cost of food, electricity, housing, transport and health as a proportion of income

for low income households - see www.ttbenchmarks.com.au Note: Data for previous years has been revised to

accommodate changes in the qualification for Family Tax Benefit Part B. 6 Ibid.

http://www.ttbenchmarks.com.au/

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COST OF LIVING, for low-income family households7, Tasmania, 2001-2010

The cost of essentials for an unemployed couple only household in 2010 took up an

estimated 74.9% of their welfare entitlement. This represented a slight decrease from 2009

(down from 75.5%). While the recent trend has followed a downward movement, from

the 2007 high of 77.5%, overall the cost of living for couple only households has risen from the 2002 figure of 71.0%8.

COST OF LIVING, for low-income couple only households9, Tasmania, 2001-2010

Anglicare Tasmania believe the apparent improvement in this cost of living index in recent

years has been largely due to a methodology change and a specific initiative in the sampled

municipality whereby a flat rate structure was introduced, resulting in a lowering of

municipal rates on average. Decreased petrol prices and interest rates, and a slight increase in the base payment may also have impacted on this cost of living measure. The recent

decline may also, in part, be a consequence of the inclusion of a previously missing income

element, Family Tax Benefit Part B, to which the family with children would be entitled.

While the Tasmania Together cost of living figures peaked in 2007, the biggest increase in

the Consumer Price Index (CPI), from one quarter to the corresponding quarter of the

previous year since the March quarter 2001, occurred between the September quarter

7 For the purposes of the Tasmania Together Cost of Living benchmark developed by Anglicare, a low-income family

household is based on an unemployed couple on Newstart Allowance with two children aged 6 and 12 years, purchasing

a new home. 8 Tasmania Together Indicator 1.1.1: The cost of food, electricity, housing, transport and health as a proportion of income

for low income households, see www.ttbenchmarks.com.au 9 For the purposes of the Tasmania Together Cost of Living benchmark, developed by Anglicare, a low-income couple only

household is based on an unemployed couple on Newstart Allowance with no children, renting public housing.

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2007 and the September quarter 2008, when the CPI for Hobart rose 4.3% compared to

1.8% in the previous 12 month period. During the same period the CPI for the weighted

average of eight capital cities rose 5.0% compared to 1.9% in the previous 12 month period. For Hobart, this particular spike was largely driven by increases in transportation (+8.7%)

and housing10 (+5.8%). Unleaded petrol prices reached a high of 160 cents per litre in the

September quarter 200811, leading to a price increase of 25.1% for automotive fuel; and

annual pricing reviews by government authorities and utility providers led to price rises for

electricity (+16.7%), gas and other household fuels (+16.0%), water and sewerage (+4.9%),

and property rates and charges (+3.5%)12. Additionally, increases in house purchase prices

were recorded in all capital cities13. Other main contributors to the increase were financial and insurance services (+9.7%), health (+5.6%), alcohol and tobacco (+5.6%), and food14

(+4.3%)15.

The Consumer Price Index

The Consumer Price Index (CPI) is regarded as Australia’s key measure of inflation. It measures the price inflation experienced by households and informs the community about changes to the real purchasing power of consumers' incomes. It is a price index, not a measure of the cost of living. The capital city indexes measure price movements over time in each city individually. They do not measure differences in retail price levels between cities. There is currently no measure to capture price changes for rural or regional areas of Australia.

The CPI is not a purchasing power or cost-of-living measure. Although it is commonly referred to as a measure of changes in purchasing power or a cost-of-living index, in an economic context these terms are not strictly interchangeable with a measure of price inflation. Their measurement would require separate, purpose built indexes. A single index cannot be expected to adequately fulfil all these roles.

An index designed to measure changes in the purchasing power of household incomes would need to be concerned with changes in the costs of all expenditures made from household income. Such a measure would include items like income tax and interest payments. A true cost-of-living index, among other things, would need to be concerned with changes in standards of living and with the substitutions that consumers make in order to maintain their standard of living when faced with changing market conditions (for instance, buying chicken rather than beef when beef prices are high).

The CPI on the other hand is constructed by reference to a basket consisting only of actual goods and services acquired by households. Further, as the composition of this basket is held fixed from period to period, it cannot accurately reflect changing consumer preferences and substitutions made in response to changes in relative prices.

Source: Australian Bureau of Statistics, 2006, A Guide to the Consumer Price Index, 15th Series, 2005 (cat. no. 6440.0)

10 The housing group includes rents, utilities (electricity, gas and other household fuels, water and sewerage), house

purchase, property rates and charges, house repairs and maintenance. For further details on CPI groups, see Australian

Bureau of Statistics 2006, A Guide to the Consumer Price Index, 15th Series, 2005, Appendix 1 (cat. no. 6440.0) 11 Australian Bureau of Statistics, Average Retail Prices of Selected Items, Eight Capital Cities, Sep 2007 and Sep 2008,

Table 1 (cat. no. 6403.0.55.001) 12 Australian Bureau of Statistics 2010, Consumer Price Index, Australia, Sep 2010 (cat. no. 6401.0) 13 Australian Bureau of Statistics 2009, Consumer Price Index, Australia, Sep 2008 (cat. no. 6401.0) 14 The food and non-alcoholic beverages group includes meals out and takeaway foods. For further details on CPI groups,

see Australian Bureau of Statistics 2006, A Guide to the Consumer Price Index, 15th Series, 2005, Appendix 1 (cat. no.

6440.0) 15 Australian Bureau of Statistics 2009, Consumer Price Index, Australia, Sep 2008 (cat. no. 6401.0)

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CONSUMER PRICE INDEX, June quarter 2007 to June quarter 2009

Five year movement in the CPI to the March quarter 2011

While prices have continued to rise over time, movements in the CPI from corresponding

quarters of previous years indicate that, from the March quarter 2006 to the March quarter

2011, Hobart’s inflation was no higher than that experienced by the rest of the country (the

CPI tracked at a similar rate to the national one, rising 14.9% for Hobart compared with

16.3% for the weighted average for eight capital cities).

FIVE YEAR MOVEMENT IN THE CONSUMER PRICE INDEX, March quarter 2006 to

March quarter 2011

Hobart’s inflation over this five-year period was mostly driven by price increases in alcohol and tobacco (+28.1%), housing (+25.3%), health (+23.8%), food (+22.3%), and education

(+22.1%).

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CONSUMER PRICE INDEX, Hobart, March quarter 2006 to March quarter 2011

Nationally, the drivers for inflation were alcohol and tobacco (+30.2%), housing (+28.4%),

education (+27.7%), health (+25.8%), and food (+22.8%)16.

CONSUMER PRICE INDEX, Weighted average of eight capital cities, March quarter 2006 to March quarter 2011

Twelve month movement in the CPI to the March quarter 2011

In the 12 months to the March quarter 2011, the All Groups17 CPI for Hobart rose 2.9%

and the All Groups CPI for the weighted average of eight capital cities rose 3.3%. The main

contributors to the increase for Hobart were in the alcohol and tobacco group (+10.3%), and the housing group (+5.3%), mainly due to rises in electricity (+15.9%), property rates

16 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011 (cat. no. 6401.0) 17 All Groups includes food, alcohol and tobacco, clothing and footwear, housing, household contents and services, health,

transportation, communication, recreation, education, and financial and insurance services. For further details on CPI

groups, see Australian Bureau of Statistics 2006, A Guide to the Consumer Price Index, 15th Series, 2005, Appendix 1

(cat. no. 6440.0)

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and charges (+6.7%), water and sewerage (+5.0%), and rents (+4.0%). Education (+3.9%),

financial and insurance services (+3.8%), food (+3.6%), and health (+3.4%) costs also rose.

Nationally, the main drivers were alcohol and tobacco (+11.2%), education (+5.9%), housing (+4.8%), food (+4.3%), and health (+4.1%)18.

Analytical living cost indexes for selected Australian household types (ALCIs)

The ALCIs provide an insight into the amounts that different household types spend on

different items, such as food, transport, housing, education and health. While no state level

data is available for the ALCIs, they are useful for illuminating some national trends in the cost of living pressures being experienced by different household types.

There are some notable differences in the expenditure weights across the four household

types:

Age pensioner households allocate the highest proportion of expenditure to food of

all the household types. Health costs also account for a significant proportion of

expenditure of age pensioner households.

Employee households allocate a higher proportion of their expenditure to

transportation, education and financial and insurance services (which includes interest charges) than the other household types.

Other government transfer recipients allocate higher proportions of their expenditure to housing, alcohol and tobacco, and communication. They also allocate a relatively

high proportion of expenditure to food.

Self-funded retiree households have higher relative expenditure on household contents and services and recreation than the other household types. Health costs

also account for a significant proportion of expenditure of self-funded retiree

households.

As a result, it can be assumed that price rises shown in the CPI for Hobart impact

disproportionately more on some households: increases in food are likely to hit age

pensioners hard, and households dependent on government pensions and allowances are

likely to be more affected by increases in housing costs as it takes up more of their total

expenditure than other household types. Given the high proportion of Tasmanian

households whose principal source of income is government pensions and allowances (34.1%) compared to other states/territories (23.2% nationally), these pressures are likely to

be exacerbated in Tasmania19.

For the year to the March quarter 2011, the ALCI for all four household types showed a

larger increase than the CPI, which rose 3.3% over the same period20.

18 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011 (cat. no. 6401.0) 19 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia 2007-08: Table 16 (cat. no.

6523.0) 20 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat.

no. 6463.0)

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ANALYTICAL LIVING COST INDEXES, selected Australian household types, Percentage

change (from corresponding quarter of previous year), March quarter 2010 to March

quarter 2011

Increases in each index were mainly due to price increases in the following21:

Main drivers of increases in each ALCI

ALCI

household

type

Electricity Fruit and

vegetables

Automotive

fuel

Rent Mortgage

interest

charges

Tobacco Hospital &

medical

services

Other

government

transfer

recipient

households

Employee

households

Age pensioner

households

Self-funded

retiree

households

The index for other government transfer recipient households rose 5.1%, mainly due to

increases in tobacco, mortgage interest charges, rents, automotive fuel, electricity, fruit and

vegetables. This was a larger increase than the CPI, which rose 3.3% to the March quarter

2011. Compared to the wider CPI population group22, other government transfer recipient

households have a relatively higher proportion of expenditure on automotive fuel and

alcohol and tobacco, which increased for the year to the March quarter 2011 and contributed to the difference.

The index for employee households rose 4.9%, mainly due to increases in mortgage interest

charges, tobacco, automotive fuel, fruit, electricity, vegetables, and rent. This was a larger

increase than the CPI, which rose 3.3% for the year to the March quarter 2011. Employee

households have a relatively higher proportion of expenditure on financial and insurance

services than the wider CPI population group.

21 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat.

no. 6463.0) 22 The wider CPI population group comprises private metropolitan households. See Australian Bureau of Statistics 2011,

Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat. no. 6463.0)

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The index for age pensioner households rose 4.1% mainly due to increases in tobacco, fruit,

electricity, vegetables, automotive fuel and rents. This was a larger increase than the CPI,

which rose 3.3% for the year to March quarter 2011. Compared to the wider CPI population group, age pensioner households also have a relatively higher proportion of

expenditure on utilities and fruit and vegetables, which increased for the year to March

quarter 2011.

The index for self-funded retiree households rose 3.4%, mainly due to increases in tobacco,

automotive fuel, fruit, hospital and medical services, electricity and vegetables. This was a

larger increase than the CPI, which rose 3.3% for the year to the March quarter 2011.

Compared to the wider CPI population group, self-funded retiree households have a relatively higher proportion of expenditure on automotive fuel and fruit and vegetables,

which increased for the year to March quarter 2011. Self-funded retiree households also

recorded increases for hospital and medical services for the year to March quarter 2011.

All four household types were impacted by increases in tobacco, automotive fuel, electricity

and fruit and vegetables for the year to the March quarter 2011. Price increases in fruit and

vegetables were partly due to recent floods and Cyclone Yasi. Mortgage interest charges

also recorded a significant increase for the year to March quarter 2011 and for conceptual reasons, this item is not included in the CPI23.

Since the series began in the June quarter 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 52.9%, followed by age

pensioner households which increased 51.3% and employee households which increased by

50.5%, slightly higher than the 46.0% increase in the CPI. The living costs of self-funded retiree households increased by 45.7%24.

These differences have come about for a number of reasons. The inclusion of mortgage

interest and consumer credit charges in the ALCIs has a substantial 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 in the

ALCIs result in variations between the ALCIs and the CPI series. The expenditure patterns

of 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 Pensioner and Beneficiary Living Cost Index

The Pensioner and Beneficiary Living Cost Index (PBLCI) has been derived by combining two of the four household types in the ALCIs: the age pensioner and other government transfer recipient households. Living Cost Indexes are intended to measure the impact of changes in prices on the out of pocket expenses incurred by these particular household types.

Source: Australian Bureau of Statistics 2011, Pensioner and Beneficiary Living Cost Index, Mar 2011; Explanatory Notes

(cat. no. 6467.0)

Through the year to the March quarter 2011, the Pensioner and Beneficiary Living Cost

Index (PBCLI) rose 4.6%. This was a larger increase than the CPI, which increased 3.3%25.

Alcohol and tobacco (+15.1%) made the greatest contribution to the annual rise in the

PBCLI, followed by financial and insurance services (+10.1%) and housing (+6.1%)26.

23 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat.

no. 6463.0) 24 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat.

no. 6463.0) 25 Australian Bureau of Statistics 2011, Pensioner and Beneficiary Living Cost Index, Mar 2011 (cat. no. 6467.0) 26 Australian Bureau of Statistics 2011, Pensioner and Beneficiary Living Cost Index, Mar 2011 (cat. no. 6467.0)

12

Since the PBLCI series began in the June quarter 2007 it has risen 15.2%, compared to a

12.2% rise for the CPI. Differences have occurred for a number of reasons that relate to

factors affecting the component series used to compile the PBLCI. The inclusion of mortgage interest and consumer credit charges and the different treatments of housing and

insurance in the PBLCI result in variations between the PBLCI and the CPI series. The

expenditure patterns of age pensioner and other government transfer recipient households

differ from those of the overall household sector covered by the CPI. This also contributes

to differences in the percentage changes27.

The data on prices presented in this paper mostly span a decade, from 2000 to 2010.

However, analysis has shown that many household costs have escalated substantially over recent years, particularly over the last five years, with the cost of essentials increasing at a

faster rate than inflation and outpacing average earnings. This is supported by the Tasmania

Together 10 Year Review, which clearly identifies cost of living as a key community concern.

The cost of living is a very complex issue. It is difficult to define and measure. Analysing

price changes and inflation rates paints only part of the picture. While the CPI is designed

to measure price inflation for households, it is not a cost of living measure. It averages price

movements for the household sector as a whole, rather than for specific household types. It measures price movements for each of the eight capital cities, but does not capture price

changes for rural or regional areas of Australia. Based on a fixed basket of goods, it cannot

accurately reflect changing consumer preferences, nor does it factor in substitutions made in

response to changes in relative prices, such as people buying apples rather than bananas

when banana prices skyrocketed following the devastating floods in Queensland.

The ALCIs and PBCLI attempt to capture the experience of certain household types, and reflect changes over time in the purchasing power of their after-tax income. It is useful to

compare these to the CPI, although conceptual differences exist between them.

In order to maintain their standard of living, people change their spending habits when

confronted with difficult choices. They ration or substitute, or sometimes go without.

Australia has no true cost-of-living index that takes such actions into account. Hence,

expenditure patterns are also useful to explore, to help build a more complete picture of

the cost of living.

27 Australian Bureau of Statistics 2011, Pensioner and Beneficiary Living Cost Index, Mar 2011 (cat. no. 6467.0)

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Household expenditure In the 12 months to June 2004, Tasmanian households spent an average of $759 each week

on goods and services (compared with $893 nationally)28. This was an increase of 28.0% since the previous Household Expenditure Survey which was conducted in 1998-99,

compared with a 27.8% increase nationally. Part of this increase can be attributed to

inflation – over the five years since the previous survey, the price of goods and services for

Hobart, as measured by the Consumer Price Index (CPI), rose by 17.8% (compared with

18.4% for the weighted average of eight capital cities)29. Over the same period, the mean

gross household income per week increased by 19.3% for Tasmania, compared with 27.5%

nationally30, and the average household size decreased from 2.49 people to 2.40 people (-3.6%) compared with a decrease from 2.60 people to 2.53 people (-2.7%) nationally31.

Broad Categories of Household Expenditure

In 2003-04, a higher proportion of Tasmanian household expenditure per week was spent

on32:

Food and non-alcoholic beverages33, with average household expenditure of $135 per

week, representing 17.8% of total household expenditure on goods and services. This was down from 18.3% in 1998-99;

Transport34, $128 per week or 16.9% of the total, up from 16.0% in 1998-99;

Housing35, $99 per week or 13.0% of the total, up from 11.9% in 1998-99.

These three categories together accounted for $362 or almost half (47.7%) of average

weekly household expenditure on goods and services in 2003-0436. The next highest

28 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Australia Data Cube: Table 25 (cat. no. 6530.0) 29 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Dec 2010 (cat. no. 6401.0) 30 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99, Australia

Summary Tables Data Cube: Table 3 (cat. no. 6530.0) and Australian Bureau of Statistics 2006, Household Expenditure

Survey, Australia: Summary of Results, 2003-04 (Reissue), Australia Data Cube: Tables 2 and 26 (cat. no. 6530.0) 31 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99, Australia

Summary Tables Data Cube: Table 3 (cat. no. 6530.0), and Australian Bureau of Statistics 2006, Household Expenditure

Survey, Australia: Summary of Results 2003-04 (Reissue), Australia Data Cube: Table 26 (cat. no. 6530.0) 32 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Tasmania Data Cube: Table 5 (cat. no. 6530.0) and Australian Bureau of Statistics 2000, Household Expenditure Survey,

Australia: Summary of Results, 1998-99, Australia Summary Tables Data Cube: Table 3 (cat. no. 6530.0) 33 Average weekly household expenditure on food and non-alcoholic beverages includes bakery products, flours and

cereals; meat; fish and seafood; eggs and egg products; dairy products; edible oils and fats; fruit and nuts; vegetables;

condiments, confectionary, food additives and prepared meals; non-alcoholic beverages; meals out and fast foods; and

other foods and non-alcoholic beverages not elsewhere classified. For further details on HES groups, see Australian

Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5

(cat. no. 6535.0.55.001) 34 Average weekly household expenditure on transport goods and services includes motor vehicle and other vehicle

purchase, fuel, lubricants and additives, registration and insurance, parts and accessories, other vehicle charges, public

transport fares, and fares and freight charges. For further details on HES groups, see Australian Bureau of Statistics 2006,

Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 35 Average weekly household expenditure on current housing costs includes rent payments, the interest component of

mortgage payments, rate payments, house and contents insurance, repairs and maintenance materials and payments to

contractors, and other current housing costs (such as the interest component on loans for alterations and additions, and

body corporate payments). For further details on HES groups, see Australian Bureau of Statistics 2006, Household

Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 36 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Australia Data Cube: Tables 25 and 26 (cat. no. 6530.0)

14

category was recreation37, with average weekly household expenditure of $95 per week.

This represented 12.5% of total expenditure, down from 13.7% in 1998-9938.

AVERAGE WEEKLY HOUSEHOLD EXPENDITURE, All households, Tasmania, 2003-04

The level and pattern of expenditure differs between households, reflecting characteristics such as income, wealth, household composition, household size and location.

The level and composition of household income and expenditure is highly related to the

social and demographic characteristics of household members. For example, households in the lowest equivalised disposable income quintile were more likely to be lone person

households and to rely on government pensions and allowances as their principal source of

income, while households in the highest quintile were more likely to be couple, one family

households and to have wages and salaries as their principal source of income39.

Household types in which the level of weekly expenditure on goods and services was

substantially below the Tasmanian state average of $759 for All Households included:

Households which relied on government pensions and allowances as their principal source of income, with average weekly expenditure of $46440;

Households which rented their dwelling from the state housing authority, with average weekly expenditure of $39941;

Lone person households, with average weekly expenditure of $41342;

37 Average weekly household expenditure on recreation goods and services includes recreational and educational

equipment (such as audio, visual and computing, books, newspapers and magazines), recreational and educational services

(such as gambling, sports fees, and cultural fees and charges), holidays, and animal expenses. See Australian Bureau of

Statistics 2006, Household Expenditure Survey, Australia: Summary of Results 2003-04 (Reissue), Australia Data Tables Data

Cube: Table 25 (cat. no. 6530.0)

The recreation group includes, sport and other recreation, holiday travel and accommodation, and gambling. For further

details on expenditure groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed

Expenditure Items, 2003-04 (Reissue); Detailed Expenditure Data Items Data Cube: Table 5 (cat. no. 6535.0.55.001) 38 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99, Australia


Survey, Australia: Summary of Results 2003-04 (Reissue), Australia Data Tables Data Cube: Table 25 (cat. no. 6530.0) 39 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

p.6 (cat. no. 6530.0) 40 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Tasmania Data Cube: Table 9 (cat. no. 6530.0) 41 Ibid.

15

Households in which the reference person was aged 65 years and over, with average

weekly expenditure of $46243.

AVERAGE WEEKLY EXPENDITURE, Selected household types, Tasmania, 2003-04

Household characteristics can also help to explain the variation in the composition of expenditure. For example, housing costs accounted for only 7.4% (8.1% nationally) of total

expenditure on goods and services of those households who owned their home outright.

At the other extreme, households renting from private landlords spent 18.8% (23.1% nationally) of their total expenditure on housing44.

State and Territory Comparison

In 2003-04, the level of expenditure varied across states and territories. Households in the

Australian Capital Territory recorded the highest average weekly expenditure ($1 064), followed by the Northern Territory ($1 044), and New South Wales ($948). Tasmania

had the lowest expenditure per week at $759.

Compared to other states/territories, a higher proportion of Tasmanian weekly household

expenditure was spent on45:

Food and non-alcoholic beverages (17.8% compared with 17.1% nationally);

Transport (16.9% compared with 15.6% nationally);

Domestic fuel and power 46 (3.7% compared with 2.6% nationally); and

Tobacco products47 (1.9% compared with 1.3% nationally).

Compared to other states/territories, a lower proportion of Tasmanian weekly household

expenditure was spent on current housing costs (13.0% compared with 16.1% nationally)48.


Tasmania Data Cube: Table 15 (cat. no. 6530.0) 43 Ibid 44 Ibid 45 Ibid 46 Average weekly household expenditure on domestic fuel and power includes electricity, gas, heating oil and wood, and

other domestic fuel and power (such as bottled gas for BBQ, and kerosene and paraffin). For further details on HES

groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-

04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 47 Average weekly household expenditure on tobacco products includes cigarettes and other tobacco products. For

further details on HES groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed

Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001)

16

Expenditure across price groups

The following information explains household expenditure across the HES price groups,

using the 2003-04 HES. Although the 2009-10 HES results were published in September

2011, they were not available in time for the commentary required undertaken in this analysis. The Strategy has updated 2009-10 HES data for key indicators.

COST OF UTILITIES

Prices: National Context

Over the five year period from the March quarter 2006 to the March quarter 2011,

utilities49 prices for the weighted average of eight capital cities increased by 56.5%. The utilities subgroup belongs to the housing group and includes other subgroups of rents and

other housing, which includes expenditure classes of property rates and charges, house

purchase and house repairs and maintenance. Utilities prices rose at a higher rate than the

national inflation rate, which increased by 16.3% over the same period50.

CONSUMER PRICE INDEX, Australia, March quarter 2006 to March quarter 2011

Prices: State Context

Over the five year period from the March quarter 2006 to the March quarter 2011, the

price of utilities increased by 41.9%, rents increased by 24.9%, and other housing increased

by 19.6%. Other housing includes house purchase, property rates and charges, and house repairs and maintenance51. This was well above the inflation rate for Hobart over this

period, which increased by 14.9%52.


Australia Data Cube: Table 25 (cat. no. 6530.0) 49 Housing goods and services priced in the 15th series CPI include rents (private and government landlords), utilities (such

as electricity, gas and other household fuels, and water and sewerage) and other housing (such as house purchase,

property rates and charges, and house repairs and maintenance). See Australian Bureau of Statistics 2005, A Guide to the

Consumer Price Index, 15th Series; Appendix 2 (cat. no. 6440.0) 50 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Tables 3 and 4 (cat. no. 6401.0) 51 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0) 52 Ibid

17

HOUSING SUB-GROUPS, Consumer Price Index, Hobart, March quarter 2006 to March

quarter 2011

Almost all utility expenditure classes53 experienced price increases well above the inflation

rate for Hobart over this five year period. Electricity prices increased the most (+49.0%),

followed by property rates and charges (+40.7%), water and sewerage (+30.1%), gas and other household fuels (+21.0), and house purchase (+18.5%). Only increases in house

repairs and maintenance prices (+11.9%) were below the Hobart inflation rate (14.9%)54.

HOUSING EXPENDITURE CLASSES, Consumer Price Index, Hobart, March quarter 2006 to March quarter 2011

Expenditure

In terms of expenditure, electricity costs are included in domestic fuel and power, while rate payments and water and sewerage payments are included in current housing costs along

with rent payments, mortgage interest, house and contents insurance, repairs and

maintenance and other costs such as body corporate fees55.

53 Examples of item coverage are provided in Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th

Series, Appendix 2 (cat. no. 6440.0) 54 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13(cat. no. 6401.0) 55 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Resissue), Table 5 (cat. no. 6535.0.55.001)

18

In 2003-04, Tasmanian households spent a higher proportion per week on housing 56(13.0%) than any other goods or services, after food (17.8%) and transport (16.9%)57.


Electricity

In 2003-04, Tasmanian households spent on average $27.86 per week on domestic fuel and power58. This represented 3.7% of their average weekly expenditure, and was the highest

proportion of all states/territories. This was higher than the national average of 2.6%59.

DOMESTIC FUEL AND POWER, Average weekly household expenditure, 2003-04

56

Average weekly household expenditure on current housing costs includes rent payments, the interest component of



body corporate payments). For further details on HES groups, see Australian Bureau of Statistics 2006, Household

Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 57

Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue), Table 5

(cat. no. 6535.0.55.001) 58

Average weekly household expenditure on domestic fuel and power includes electricity, gas, heating oil and wood, and

other domestic fuel and power (such as bottled gas for BBQ, and kerosene and paraffin). For further details on HES

groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items,

2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 59

Ibid

19

Of the weekly household expenditure on domestic fuel and power, most was spent on

electricity (86.2%), followed by wood for fuel (7.7%) and bottled gas (excluding for BBQs)

(3.7%)60.

DOMESTIC FUEL AND POWER, Average weekly household expenditure, Tasmania,

2003-04

Expenditure on domestic fuel and power in Tasmania remained relatively unchanged from 1998-99 (3.6%)61 to 2003-04 (3.7%)62. From 2003 to 2007, quarterly electricity bills

continued to be quite stable, with the amount customers were paying increasing only

marginally more than the Consumer Price Index (CPI): from the December quarter 2003 to the December quarter 2007, electricity prices rose 13.2% compared to a 12.1% rise in the

CPI63.

However, since this time, substantial electricity price increases have been experienced right

across Australia. Comparative figures published by Aurora Energy show that in the three

year period from 2007-08 to 2009-10, Tasmania’s electricity costs rose 27.1%, compared

with 33.4% in New South Wales, 46.6% in Victoria, 32.3% in Queensland, 23.6 % in South

Australia, 32.5% in Western Australia, 25.8% in the Northern Territory, and 30.2% in the Australian Capital Territory64.

In Tasmania, a further price increase of 6.0% occurred in July 2010, followed by an 8.8%

price rise from 1 December 2010. Another increase from 1 July 2011 of 11.0% was higher than expected65. Aurora Energy’s Retail Pricing Proposal for Period 2 from 1 July 2011

confirmed that a further price increase of 8.7% will take effect from 1 July 201266, as

60 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue), Table 5 (cat. no. 6535.0.55.001) 61

Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99, Tasmania

Data Cube (cat. no. 6530.0) 62

Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Table 5 (cat. no. 6530.0) 63

Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Dec 2010, Table 13 (cat. no. 6401.0) 64 State and territory economic regulatory authorities, as at August 2010, except for Victoria after 2007-08, where

electricity prices were no longer regulated by a Victorian regulatory authority. These figures are sourced from cost

comparison and electricity retailer websites. For further information go to Your electricity prices explained, Aurora Energy,

see www.auroraenergy.com.au 65 An increase of 8.5% had been foreshadowed in the Regulator’s Final report of October 2010. However, higher than

expected network charges added 2% to the expected increase, and higher than expected renewable energy charges

added about 0.5% to the expected increase. Also, the CPI, at 2.655%, was higher than the assumption of 2.5% on which

the Final Report was based. See Aurora Energy, Retail Pricing Proposal for Period 2 From 1 July 2011, p.2 66 Aurora Energy, Retail Pricing Proposal for Period 2 From 1 July 2011, p.14

20

indicated in the Regulator’s Final Report67. This totals a 34.5% increase over the three year

period 2010-11 to 2012-13.

These increases have been reflected in the CPI for Hobart. From the March quarter 2006 to the March quarter 2011, electricity prices rose 49.0% compared to a 14.9% increase in

the All Groups CPI. Over this five year period, the average annual increase for electricity

prices was 8.4%. This was above the average annual CPI increase of 2.8%. In the 12 month

period between the March quarter 2010 and the March quarter 2011, Hobart’s electricity

prices recorded an increase of 15.9%, compared to a CPI increase of 2.9%68.

Tasmania has the highest residential consumption of electricity in the nation. In 2008-09,

the average consumption per connection was 9.50 MWh compared with 6.81 MWh nationally. This can largely be attributed to the colder climate, standard of housing and the

propensity for electric heating, and the limited availability of natural gas for cooking, space

heating and water heating69. In comparison to other states and territories, Tasmania has a

relatively low penetration of natural gas. However, the number of natural gas customers

has increased steadily since its introduction in 2005-06, from 747 to 8 042 in 2009-1070.

Growth in the natural gas industry is expected to continue.

Who spends more on electricity?

Increases in the basic cost of living can have a major impact on living standards for different households who spend a higher proportion of their average weekly expenditure on

essential goods and services.

The average weekly expenditure on domestic fuel and power for all households in Tasmania equated to 3.7% of total expenditure in 2003-04, but some household types

spent disproportionately more than the state average, including71:

Renters from the state housing authority spent 5.6%;

Single parent households spent 5.3%;

Households dependent on government pensions and benefits spent 5.2%;

Lone person households spent 5.1%;

Low-income households72 spent 4.8%;

Households with a reference person aged 65 years and over spent 4.7%;

Renters from a private landlord spent 4.2%; and

Households with a reference person aged 55-64 years spent 4.0%.

Property Rates, Water and Sewerage

In 2003-04, Tasmanian households spent approximately $99 per week on current housing

costs, which includes property rates, water and sewerage, rents, house purchase, property

67 Office of the Tasmanian Economic Regulator, October 2011, Investigation of maximum prices for declared retail

electrical services on mainland Tasmania: Final Report, Table 13, p. XLII. See www.economicregulator.tas.gov.au 68 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0) 69 Office of the Tasmanian Economic Regulator, January 2011, Tasmanian Energy Supply Industry Performance Report

2009-10, Table 8.3, p.124 70 Office of the Tasmanian Economic Regulator, January 2011, Tasmanian Energy Supply Industry Performance Report

2009-10, Table 10.6, p.150 71 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue) (cat.

no. 6530.0) 72 Households falling in the second and third equivalised disposable household income deciles. See Australian Bureau of

Statistics 2009, Household Income and Income Distribution, Australia, 2007-08, Explanatory Notes (cat. no. 6523.0)

21

rates and charges, house repairs and maintenance. This represented 13.0% of the total

household expenditure on goods and services73. This was up from 11.9% in 1998-9974.

In Tasmania, of the weekly household expenditure on housing, 15.7% most was spent on rate payments75. Tasmanian households spent a higher proportion of average weekly

expenditure than all states/territories except SA on rate payments (including water and

sewerage). Average weekly expenditure on property rates was $15.56, which equated to

15.7% of the total expenditure on housing. This was above the national average of 12.8%.

South Australia had the highest weekly expenditure on rate payments at 16.0%76.

Heating

Heaters are a major contributor to household energy costs in Tasmania. In 2008, over 90%

of dwellings in Tasmania had heaters, compared with 77% nationally77. Of Tasmanian households with heaters, most (41.6%) had electric heating, followed by wood (26.9%),

reverse cycle air conditioner/heat pumps (26.5%) and gas (3.4%). By contrast, the most

popular type of heating nationally was gas (41.2%) followed by reverse cycle air conditioner/heat pumps (26.0%), electric (19.6%), and wood (12.7%)78.

MAIN TYPE OF HEATERS IN DWELLINGS, 2008

Of wood heating in Tasmania, wood combustion heaters were the main type of heating in

22.8% of households with heaters, followed by open fires 2.5%* and pot belly stoves

1.6%*79. The proportion of dwellings with wood heating fell from 37.9% in 2005 to 26.9% in 2008, while the proportion of households with reverse cycle air conditioner/heat pumps

was up from 14.1% in 2005. The proportion of households using electric and gas heating

remained relatively unchanged80. However, with the rising cost of electricity, recent sales

trends suggest that wood heating is once again growing in popularity in Tasmania.81

.

73 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue), TAS

Data, Table 3 (cat. no. 6530.0) 74 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99 (cat. no.

6530.0) 75 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue), Table 5 (cat. no. 6535.0.55.001) 76 Ibid 77 Australian Bureau of Statistics 2008, Environmental Issues: Energy Use and Conservation, Mar 2008, p.55

(cat. no. 4602.0.55.001) 78 Australian Bureau of Statistics 2008, Environmental Issues: Energy Use and Conservation, Mar 2008; Chapter 4 Heaters and

Coolers Data Cube: Table 4.8 (cat. no. 4602.0.55.001) 79 Estimate has a relative standard error of between 25% and 50% and should be used with caution. See Australian

Bureau of Statistics 2008, Environmental Issues: Energy Use and Conservation, Mar 2008; Chapter 4 Heaters and Coolers

Data Cube: Table 4.8 (cat. no. 4602.0.55.001) 80 Ibid 81 Craig Hoggett, 31 May 2011, The Mercury: ‘More return to wood heat’

22

MAIN TYPE OF HEATERS IN DWELLINGS, Tasmania

The decline in the use of wood heaters is largely attributable to tighter regulations being

introduced in 2007 to reduce particle pollution from woodsmoke. Compared to other

states/territories, a higher proportion of Tasmanian households used their heaters for six

months or more each year. In 2008, on average, 38.2% of Tasmanian households used their heaters for six months or more, compared with 14.9% of households in the Australian

Capital Territory and 11.9% of Victorian households. This was higher than the national

average of 7.4% of households82.

Nationally, ‘comfort/convenience’ was cited as the main reason for the choice of heater

(regardless of type), cost price was also a factor, as was saving on energy bills83. Less than

2% of Australian households chose their type of heating based on environmental considerations84.

House size may also be a consideration with regard to household heating costs. Between

1994 and 2008, the number of Australian homes with four or more bedrooms rose from 21% to 29%, while the number of one, two and three bedroom homes all decreased. The

increasing size of homes means that more space needs to be heated, consuming more

energy and escalating costs.85.

Who is most affected by the cost of utilities?

In 2009-10, only two-thirds (65.7%) of residential customers paid their account by the due date. Prompt payment decreased from 66.7% the previous year despite the introduction of

a late payment fee, interest charges and a discount for payments via direct debit. Aurora

Energy charged 84 980 residential customers a late payment fee in 2009-10 compared to 81 907 the previous year. The total amount of residential late fees in 2009-10 was $428

351 compared to $399 672 the previous year86.

The 2010 Household, Income and Labour Dynamics in Australia Survey (HILDA)87 found

that up until 2006, the most commonly reported financial problem in Australia was the

82 Australian Bureau of Statistics 2008, Environmental Issues: Energy Use and Conservation, Mar 2008; Chapter 4 Heaters and

Coolers Data Cube: Table 4.10 (cat. no. 4602.0.55.001) 83 Ibid. 84 Australian Bureau of Statistics 2008, Environmental Issues: Energy Use and Conservation, Mar 2008; p.56

(cat. no. 4602.0.55.001) 85 Australian Bureau of Statistics 2010, Energy in Focus: Energy Efficiency of Australian Homes, Apr 2010 (cat. no.

4614.0.55.002) 86 Office of the Tasmanian Economic Regulator, January 2011, Tasmanian Energy Supply Industry Performance Report 2009-

10, p.128 87 Melbourne Institute of Applied Economic and Social Research, University of Melbourne 2010, Families, Incomes and Jobs

Volume 5, ‘A Statistical Report on Waves 1 to 7 of the Household, Income and Labour Dynamics of Australia Survey (HILDA)’.

This is a large-scale, nationally representative, longitudinal survey of Australian households, with information on labour

force status and history, current and financial year income, wealth, family relationships, child care, health status, financial

23

inability to pay utility bills on time. This was reported by 17.7% of respondents in 2001,

14.3% in 2003, 12.3% in 2005, 11.5% in 2006 and 11.2% in 2007. In 2007 this problem was

overtaken by ‘asking for financial help from friends or family’, which had previously been the second most common problem. This could be interpreted as an attempt to find a way to

overcome their inability to pay utility bills. The survey noted that while levels of financial

stress88 appeared to fall substantially between 2001 and 2006, indications are that this

decline was halted in 2007, with events since then suggesting the beginning of an upward

trend89.

A 2009 Anglicare survey of clients of emergency relief services in Tasmania found that

almost one-third (30.3%) of participants reported that the cost of electricity was a big problem for their household, with 18.4% citing the electricity bill as the main reason for

needing assistance. Those people most likely to experience problems with electricity bills

were people on a Disability Support Pension (40.4%), people with three or more children

(45.8%) and couples with children (40.3%). Approximately one-third (31.1%) of

respondents reported that they had an overdue electricity bill, while 67.9% had been unable

to pay a utilities (electricity, gas or water) bill in the previous year. A shortage of money

meant that 57.4% of respondents had been unable to heat their home in the previous year, and 28.3% had their electricity supply disconnected90.

In contrast to the rest of Australia, the rate of disconnection in Tasmania has been

increasing over recent years, compared to decreases in other states and territories91. In the

2009-10 financial year, 1 396 (0.62%) residential customers had their electricity supply

disconnected. This was a 37.9% increase from the previous year when 1 012 (0.45%)

residential customers were disconnected. Of those disconnected, 544 (38.9%) were concession holders and 218 (15.6%) had been disconnected more than once within a

rolling 24 month period. In the last twelve months, the number of repeat disconnections

increased 16.6%, from 187 at the end of June 2009 to 218 at the end of June 201092. Of

the repeat disconnections, more than one-quarter (28.4%) were concession cardholders93.

Most disconnections tend to be related to inability to pay94.

stress, housing, education, retirement intentions and work/family attitudes. The first wave of data was released in February

2003. The program for waves 9-12 is expected to run from July 2008 to June 2014. 88 Financial stress refers to an inability to meet basic financial commitments because of a shortage of money. Measures of

financial stress therefore provide direct evidence on the adequacy of economic resources of individuals and households.

The HILDA Survey obtains information from all respondents on inability to pay bills, having to dispose of possessions,

going without meals, being unable to heat the home and obtaining material help from others, which facilitate the

construction of measures of financial stress. 89 Melbourne Institute of Applied Economic and Social Research, University of Melbourne, 2010, Families, Incomes and Jobs

Volume 5, ‘A Statistical Report on Waves 1 to 7 of the Household, Income and Labour Dynamics of Australia Survey (HILDA),

p.41 90 Flanagan, K. 2010, Hard Times: Tasmanians in Financial Crisis, Anglicare Tasmania, pp.97-98 91 Office of the Tasmanian Economic Regulator, January 2011, Tasmanian Energy Supply Industry Performance Report 2009-

10, p.129

NOTE: When comparing rates, it should be noted that many mainland consumers have access to natural gas as an

alternative fuel source. As such, their electricity accounts are comparatively smaller and therefore “more easily paid”.

Aurora Energy accounts are generally whole-of-energy supply and therefore can be substantial if customers have not

budgeted adequately. The Tasmanian climatic and environmental issues must also be taken into account. Further, average

lower per capita income in Tasmania makes affordability more of an issue. 92 Office of the Tasmanian Economic Regulator, January 2011, Tasmanian Energy Supply Industry Performance Report 2009-

10, p.130 93 Ibid, p.129 94 Office of the Tasmanian Economic Regulator, January 2008, Tasmanian Energy Supply Industry Performance Report 2007-

08, p.131

24

RESIDENTIAL DISCONNECTIONS, Tasmania

Various payment options have been introduced to assist customers who may be having

difficulty paying their accounts. These include direct debit95, CentrePay96, EasyPay97, PrePay98, payment plans and debt reduction arrangements99.

Not all APAYG meters can pick up a self-disconnection. The Tasmanian Electricity Code

requires that meters installed on or after 1 January 2008 are able to detect and report self

disconnection. Meters currently being installed by Aurora on a new and replacement basis

will meet this requirement. However, it is unclear what percentage of APAYG meters allow

disconnection to be recorded and therefore the level self disconnection is under reported.

COST OF HOUSING

Prices: National Context

Over the five year period from the March quarter 2006 to the March quarter 2011, housing100 prices for the weighted average of eight capital cities increased by 28.4%. This

was the second biggest price increase, after alcohol and tobacco (+30.2%). The Consumer

Price Index (CPI) housing group includes utilities, property rates and charges, rents, house purchase, and house repairs and maintenance. Housing prices rose at a higher rate than the

national inflation rate, which increased by 16.3% over the same period101.

95 Payment is made automatically from a nominated bank account on the due date. As an added bonus, all customers who

pay their electricity bill by Direct Debit using their savings or cheque account receive the Aurora Direct Debit Discount of

$5 (5.5 cents per day GST inclusive) off the total bill for a standard 91-day statement period. 96 Centrepay allows customers to have fortnightly deductions made from their income support payment, which are then

deducted from their next electricity bill 97 EasyPay allows customers to make regular, even payments, spreading the cost burden across the year and avoiding

those big bills over winter. 98 PrePay is a secure and convenient way to make advance payments against electricity charges. 99 Aurora Energy 2010, Aurora Annual Report 2009-10: Hardship Policy, p.39 and Bill Payment Options, viewed 14/01/11,

http://www.auroraenergy.com.au/my_home/bills_and_payments/bill_payment_options.asp#direct_debit 100 Housing goods and services priced in the 15th series CPI include rents (private and government landlords), utilities

(such as electricity, gas and other household fuels, and water and sewerage) and other housing (such as house purchase,

property rates and charges, and house repairs and maintenance). See Australian Bureau of Statistics 2005, A Guide to the

Consumer Price Index, 15th Series; Appendix 2 (cat. no. 6440.0) 101 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Tables 3 and 4 (cat. no. 6401.0)

25


Prices: State Context

Over the five year period from the March quarter 2006 to the March quarter 2011, the price of housing for Hobart increased by 25.3%. This was the second highest price increase

after alcohol and tobacco (+28.1%), and was above the inflation rate for Hobart over this

period, which increased by 14.9%102.


Of the housing subgroups, utilities increased by 41.9%, rents increased by 24.9%, and other

housing increased by 19.6%. Other housing includes house purchase, property rates and

charges, and house repairs and maintenance103.

102 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0) 103 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0)

26

HOUSING SUB-GROUPS, Consumer Price Index, Hobart, March quarter 2006 to March

quarter 2011

Almost all housing expenditure classes104 experienced price increases above the inflation rate for Hobart over this five year period. Electricity prices increased the most (+49.0%),

followed by property rates and charges (+40.7%), water and sewerage (+30.1%), rents

(+24.9%), gas and other household fuels (+21.0), and house purchase (+18.5%). Only

increases in house repairs and maintenance prices (+11.9%) were below the inflation rate

for Hobart, which was 14.9%105.

HOUSING EXPENDITURE CLASSES, Consumer Price Index, Hobart, March quarter 2006 to March quarter 2011

Expenditure

In 2003-04, Tasmanian household average expenditure on housing106 was $99.02 per week,

which represented 13.0% of total weekly household expenditure107. This was up from 1998-

104 Examples of item coverage are provided in Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index,

15th Series, Appendix 2 (cat. no. 6440.0) 105 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 13 (cat. no. 6401.0) 106 Average weekly household expenditure on current housing costs includes rent payments, the interest component of



27

99, when current housing costs accounted for 11.9% of average weekly household

expenditure108.

In 2003-04, Tasmanian households spent a higher proportion of expenditure per week on housing (13.0%) than any other goods or services, after food (17.8%) and transport

(16.9%)109.


Compared to other states/territories, Tasmanian households spent the lowest proportion of

weekly expenditure on current housing costs. The Northern Territory spent the most

(17.3%), followed by New South Wales and Queensland (both 17.2%). The national

average was 16.1%110.

body corporate payments). For further details on household expenditure groups, see Australian Bureau of Statistics 2006,

Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 107 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue); Household Expenditure Survey, Australia: Detailed Expenditure Items Data Cube: Table 5 (cat. no.

6535.0.55.001) 108 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Detailed Expenditure Items, 1998-99; State

and Quintile Detailed Tables Data Cube: Table 5 (cat. no. 6535.0) 109 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001) 110 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001)

28

CURRENT HOUSING COSTS (Selected dwellings), average weekly household

expenditure, all households, 2003-04

In Tasmania, of the weekly household expenditure on housing, most was spent on rent (28.4%), followed by mortgage interest (26.7%) and rate payments111 (15.7%)112.

CURRENT HOUSING COSTS (Selected dwellings), average weekly household

expenditure, Tasmania, 2003-04

Who spends more on housing costs?

The average weekly expenditure on housing for all households in Tasmania equated to

13.0% of total expenditure in 2003-04, but some household types spent disproportionately

more than the state average. These included113:

Lone person households spent 19.8%;

Renters from the state housing authority spent 19.0%;

Renters from a private landlord spent 18.8%;

Households with a reference person aged 15-24 years spent 18.2%;

Households with a reference person aged 25-34 years spent 17.7%;

111 Note: While rate payments are included in expenditure on current housing costs, the costs associated with rates,

together with electricity, water and sewerage, are discussed separately in section 5.1 Cost of Utilities. 112 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001) 113 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue) (cat.

no. 6530.0)

29

Single parent households spent 15.3%;

Owners with a mortgage spent 14.9%; and

Households dependent on government pensions and benefits and low-income

households114 both spent 14.7%.

The Analytical Living Cost Indexes for Selected Australian Household Types (ALCIs) are

specifically designed to measure changes in living costs for employee households115, age

pensioner households116, other government transfer recipient households117, and self-funded retiree households118.

The ALCIs provide an insight into the amounts that different household types spend on

different items, such as housing. While no state level data is available for the ALCIs, they are useful for illuminating some national trends in the cost of living pressures being

experienced by different household types.

An important distinction to note, when taking into account the impact of housing costs on

different household types, is that the ALCIs include mortgage interest costs whereas the

CPI does not119. The inclusion of mortgage interest charges in the ALCIs has a substantial

impact for employee and other government transfer recipient households, and result in

variations between the ALCIs and the CPI.

Differences in the expenditure patterns and weights across the ALCI household types

means that employee households and other government transfer recipient households have

a relatively higher proportion of expenditure on housing, compared to the wider CPI population group120. As a result, it can be assumed that housing price rises shown in the

CPI for Hobart impact disproportionately more on these household types. With a higher

proportion of households dependent on government pensions and allowances as their

principal source of income (34.1%), compared with other states/territories, and higher than

the national average of 23.2%, cost pressures associated with increases in housing prices are

likely to be exacerbated in Tasmania121.

For the year to the March quarter 2011, mortgage interest charges recorded a significant increase for the year, and for conceptual reasons, this item is not included in the CPI122.

114 Low-income households are defined by the ABS as those households falling in the second and third equivalised

disposable household income decile. See Australian Bureau of Statistics 2009, Household Income and Income Distribution,

Australia, 2007-08; Explanatory Notes (cat. no. 6523.0) 115 Employee households are those households whose principal source of income is from wages and salaries. 116 Age pensioner households are those households whose principal source of income is the age pension or Veterans

Affairs pension. 117 Other government transfer recipient households are those households whose principal source of income is a

government pension or benefit other than the age pension or Veterans Affairs pension. 118 Self-funded retiree households are those households whose principal source of income is superannuation or property

income and where the household Expenditure Survey (HES) defined reference person is ‘retired’ (not in the labour force

and over 55 years of age. 119 For a discussion of the relationship between the ALCIs and CPI, see Australian Bureau of Statistics 2011, Analytical Living

Cost Indexes for Selected Australian Household Types, Mar 2011; Explanatory Notes (cat. no. 6463.0) 120 The wider CPI population group comprises private metropolitan households. See Australian Bureau of Statistics 2011,

Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat. no. 6463.0) 121 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia 2007-08: Table 16 (cat. no.

6523.0). Data is also presented in Tasmania Together Indicator 1.1.2: Proportion of households where primary source of

income is government pensions or allowances. See www.ttbenchmarks.com.au 122 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Mar 2011 (cat.

no. 6463.0)

30

Household net worth

Expenditure on current housing costs may also be influenced by the level of household net

worth. Household wealth or net worth is derived from the value of household assets, such

as home ownership, less the value of their liabilities, such as housing loans, car loans and credit card debt123.

Wealth distribution differs from income distribution. Typically, wealth accumulates with age.

Younger households are likely to have low wealth but relatively high income, while retiree

households are more likely to have high wealth and relatively low income. There is also a strong correlation between net worth and home ownership, as for many households, their

dwelling is their main asset124.

Households with low net worth are likely to have high housing costs, as they are most likely to be servicing a mortgage or paying rent. Households with high net worth are more likely

to own their own home with only a small or no mortgage outstanding, and therefore only

have low housing costs125.

In 2003-04, current housing costs comprised 20.0% of total expenditure on goods and

services for households in the lowest net worth quintile in Tasmania, but only 8.9% for

households in the highest quintile126. Only 5.5% of households in the lowest net worth

quintile owned their own home (with or without a mortgage), compared to 100% in the highest quintile, while 89.9% of the households in the lowest net worth quintile were

renters127.

House Prices

House prices are an important factor in determining overall housing costs. House prices influence: the affordability of buying and renting homes, as well as impacting on property

values128.

The price of established houses in Hobart rose 33.3% in the five year period from the

March quarter 2006 to the March quarter 2011. Meanwhile, the price of established

houses in the capital cities rose by 39.4%. Hobart house prices increased at an average of

6.1% per year over this period, compared to 7.2% for the weighted average of capital cities. The decline in 2009 reflects, in part, the impact of the global financial crisis, and the

subsequent economic slowdown129.

123 Australian Bureau of Statistics 2007, Household Wealth and Wealth Distribution, Australia, 2005-06; Summary of Findings (cat. no. 6554.0) 124 Ibid 125 Ibid 126 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia, 2003-04 (Reissue); TAS Data, Tables 3-20,

2003-2004 Data Cube, Table 7 (cat. no. 6530.0) 127 **Estimate has a relative standard error greater than 50% and is considered too unreliable for general use. See

Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia, 2003-04 (Reissue); TAS Data, Tables 3-20,

2003-2004 Data Cube, Table 8 (cat. no. 6530.0) 128 Australian Bureau of Statistics 2010, Measures of Australia's Progress, 2010; Housing (cat. no. 1370.0) 129 Australian Bureau of Statistics 2011, House Price Indexes: Eight Capital Cities, Mar 2011 (cat. no. 6416.0)

31

HOUSE PRICE INDEX, March quarter 2006 to March quarter 2011

Housing Costs

For most Australians, housing costs will be the most substantial expenditure item throughout their lives, no matter if they own or rent their home. Housing costs are

generally the largest regular expenses to be met from a household's current income130.

Housing costs vary depending on household characteristics, such as tenure type, the type of

dwelling, household size and composition, as well as location. For home owners without a mortgage, housing costs relate mostly to property rates and charges. For home owners

with a mortgage, they comprise mortgage payments as well as property rates and charges.

For households renting, housing costs relate to the amount of rent paid to landlords131.

In 2007-08, the mean (average) weekly housing costs for all households in Tasmania were

$141, compared with $216 nationally132.

Housing costs were higher for owners with a mortgage than for other forms of tenure.

Owners with a mortgage spent an average of $257 per week on housing costs, compared

with $384 nationally. This represented 16% of their average gross weekly income,

compared with 18% nationally133.

Households renting from private landlords spent an average of $187 per week134, compared with $267 nationally. This represented 18% of their average gross income, both in

Tasmania and nationally. Households renting from the state housing authority spent an

average of $93 per week, compared with $105 nationally. This represented 17% of their

average gross income, compared with 19% nationally135.

For owners without a mortgage, the average weekly housing costs were considerably lower,

at $27, compared with $33 nationally. This represented 2% of average gross weekly income for those households, both in Tasmania and nationally136.

130 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08: Summary of Findings (cat. no. 4130.0) 131 Australian Bureau of Statistics 1999, Housing Occupancy and Costs, Australia, 1997-98 (cat. no. 4130.0) 132 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08: Housing and Occupancy Costs 2007-08

Data Cube: Table 22 (cat. no. 4130.0) 133 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08: Housing and Occupancy Costs 2007-08

Data Cube: Tables 1 and 2, and State and Territory Data Cube: Tables 6 and 14 (cat. no. 4130.0) 134 The effect of Commonwealth Rent Assistance (CRA) should be taken into consideration when comparing the housing

costs of private renters to those of other households. Eligible social security recipients may receive a non-taxable income

supplement in the form of CRA if the private rent they pay is above a threshold level. It is estimated that CRA effectively

lowers the total housing costs by 10% for all private renters. See Australian Bureau of Statistics 2009, Housing Occupancy

and Costs, 2007-08; Explanatory Notes (cat. no. 4130.0) 135 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08: Housing and Occupancy Costs 2007-08

Data Cube: Tables 1 and 2, and State and Territory Data Cube: Tables 6 and 14 (cat. no. 4130.0) 136 Ibid.

32

Mean housing costs per week in 2007–08 dollars

Tasmania Australia

Tenure and landlord type

Owner without a mortgage $ 27 33

Owner with a mortgage $ 257 384

Renter from the state housing authority $ 93 105

Renter from a private landlord $ 187 267

Family composition of household

Couple family with dependent children $ 225 321

Single parent family with dependent

children

$ 162 222

Couple only $ 91 182

Lone person $ 116 141

Principal source of income

Wages and salaries $ 199 281

Government pensions and allowances $ 70 83

All households $ 141 216

Source: ABS Housing Occupancy and Costs, 2007-08, Housing Occupancy and Costs, 2007–08 , Table 1 and State and

territory data, 1994–95 to 2007–08, Table 6 (cat. no. 4130.0)

Nationally, low-income households reported lower housing costs, on average, although

housing costs represented a higher proportion of their household income. Low-income

owners with a mortgage spent 27% (or $281) of their gross weekly income on housing

costs, compared with 18% (or $384) for all households. Low-income households renting

from a private landlord spent 28% (or $236) of their gross weekly income on housing costs,

compared with 18% (or $267) for all households137.

As people move through the lifecycle, the pattern of tenure tends to move from renting as

a young adult to buying a home as families are established, to eventually paying off

mortgages and owning homes outright. Home ownership tends to increase with age, with the likelihood of owning a home outright also increasing with age. However, in Tasmania,

despite our ageing population, the proportion of home owners without a mortgage has

decreased over time, from 42.0% in 2000-01 to 36.4% in 2007-08. Over the same period, the proportion of home owners with a mortgage has increased from 29.0% in 2000-01 to

34.9% in 2007-08. The proportion of households renting from a private landlord increased

slightly, from 15.7% in 2000-01 to 17.2% in 2007-08, while the proportion of households

renting from the state housing authority decreased from 9.5% in 2000-01 to 6.9% in 2007-08138. The decline in outright home ownership may, in part, be due to increasing uptake of

flexible low-cost financing options which allow households to extend their existing home

mortgages for purposes other than the original home purchase139.

137 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08; Summary of Findings (cat. no. 4130.0) 138 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08; State and Territory Data Cube: Table:

Table 22 (cat. no. 4130.0) 139 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08: Summary of Findings (cat. no. 4130.0)

33

HOUSING TENURE, Tasmania

Housing costs are a major component of total living costs. Households may experience

hardship if their economic resources (income and wealth) are low relative to high housing

costs. Some people pay high rent or mortgage repayments, especially if they live in areas

with high land and house values. Others may have lower rent or mortgage repayments

because they live in subsidised housing or areas with relatively low property prices, or they

may have relatively small mortgages.

Preferences for particular types of housing or locations also play a part in determining

housing costs. People may choose to live in a particular area because of its proximity to

their place of employment or education. This may result in lower transport costs, but if property values are high, they may incur higher housing costs. Other people may choose to

live on the urban fringe where house purchase prices or rent may be lower, but the lack of

or inadequacy of infrastructure and services may result in higher transport costs.

Mortgage repayments off the loan principal add to the net wealth of a household. Newer

or larger houses or houses located in a more affluent area may be purchased as a form of

investment, with households choosing to pay relatively high housing costs.

Access to secure, appropriate, and affordable housing is important for maintaining health

and for providing stability. Rising property values have resulted in prosperity for some, but

for others, housing affordability has been reduced. The rapid increase in land and property

prices over recent years has put home ownership out of the reach of many lower income households. At the same time, low vacancy rates in the private rental market has made it

difficult to find affordable rentals140.

Housing Affordability

Housing affordability is a major contributor to both the cost of living and the standard of

living, because housing represents the largest item in household budgets141.

Housing affordability in Australia has deteriorated over recent decades, with Australia now

considered to have one of the most unaffordable housing markets in the world142. The

140 Legislative Council Select Committee Report on Housing Affordability in Tasmania, Parliament of Tasmania, 15 April

2008, Executive Summary, p.2. 141 Cox, W. And Pavletich, H. 2011, 7th Annual Demographia International Housing Affordability Survey: 2011 Ratings for

Metropolitan Markets, p.4, http://www.demographia.com/dhi.pdf

34

2011 Demographia International Housing Affordability Survey143 compared affordability by

measuring median house prices against average household incomes. Of Australia’s

metropolitan housing markets, 85% were rated as “severely unaffordable”144. This was primarily due to restrictive land use policies that limit housing development on the urban

fringe, and drive up land costs. Between 1993 and 2006, land costs accounted for 95% of

the increase in standardized house and land prices combined, while house construction

costs accounted for only 5%145.

In Tasmania, housing affordability has emerged as an issue of concern in recent years146.

Between 2001-02 and 2007-08 the Tasmanian house price to income ratio increased from

1:3.4 to 1:5.4, meaning that by 2007-08 it cost 5.4 times the median annual household income to purchase a house at the median annual sale price147.

HOUSE PRICE TO INCOME RATIO, Tasmania

While house prices increased relative to Tasmanian incomes from 2001-02 to 2003-04, the situation has been slowly reversing since this time, with a slight improvement evident in the

ratio of income to house prices between 2003-04 and 2007-08148.

Housing affordability is driven by a variety of factors, including composition of households, changes in income and wealth, the availability of finance and tax incentives (such as the First

Home Buyers Scheme), and supply factors such as land availability, land development

policies and construction costs149.

In order to purchase a home and service a home loan, many households now rely on

having two incomes150. However, in 2007-08, more than one-quarter (27.7%) of Tasmanian

households were lone person households (compared with 24.8% nationally), with only one

142 Sydney, Perth, Melbourne and Adelaide in the top 3% of the world's most unaffordable housing markets. See Cox, W.

And Pavletich, H. 2011, 7th Annual Demographia International Housing Affordability Survey: 2011 Ratings for Metropolitan

Markets, http://www.demographia.com/dhi.pdf 143 The Survey covers housing affordability in metropolitan markets in Australia, Canada, Ireland, New Zealand, the United

Kingdom, the United States and Hong Kong in China, providing standardized comparisons of housing affordability between

international housing markets. See Cox, W. And Pavletich, H. 2011, 7th Annual Demographia International Housing

Affordability Survey: 2011 Ratings for Metropolitan Markets. See http://www.demographia.com/dhi.pdf 144 Cox, W. And Pavletich, H. 2011, 7th Annual Demographia International Housing Affordability Survey: 2011 Ratings for

Metropolitan Markets, p.9. See http://www.demographia.com/dhi.pdf 145 ibid. 146 Legislative Council Select Committee Report on Housing Affordability in Tasmania, Parliament of Tasmania, 15 April

2008, p.23 147 Tasmania Together Indicator 1.1.5: Tasmanian house price to income ratio. See www.ttbenchmarks.com.au 148 Tasmania Together Indicator 1.1.5: Tasmanian house price to income ratio. See www.ttbenchmarks.com.au 149 Yates, J and Milligan, V, 2007 Housing affordability: a 21st century problem, report for the Australian Housing and Urban

Research Institute (AHURI), September 2007 150 Australian Bureau of Statistics 2002, Australian Social Trends, 2002: Housing Arrangements: Renter households (cat. no.

4102.0)

35

income. Additionally, 7.2% of Tasmanian households were single parent households

(compared with 6.2% nationally), with access to only one income151.

Interest rates also play a role in housing affordability. The housing interest rate has fluctuated over the last ten years, from a low of 6.3% in 2002 to a high of 8.8% in 2008. In

the 12 months from 2009 to 2010, there was a downward movement, from 7.3% to

6.5%152.

HOUSING INTEREST RATE, Australia

Research by the Commonwealth Bank found that housing affordability in Australia was impacted by a series of interest rate rises in 2010, in March, April, May and November.

However, in the March quarter 2011, with interest rates remaining steady, housing

affordability improved. Growth in average weekly earnings and a ‘softening in dwelling prices’ also contributed to improved housing affordability. Their findings showed that in the

March quarter 2011, 1.5 average full-time adult wages were required to affordably service a

mortgage on a median priced dwelling in Hobart, compared with 2.0 for Sydney and

Melbourne, 1.8 for Perth and 1.7 for Adelaide153.

In the September quarter 2010, the Commonwealth Bank Housing Affordability Index

stated that Tasmania had “the most affordable housing in the country by a significant

margin.”154 Likewise, the ANZ Housing Snapshot 2011 stated that “with the cheapest

median house prices available in any Australian capital city, Hobart remains one of the most

affordable housing markets in the country”155. However, recent research by the National

Centre for Social and Economic Modelling (NATSEM) showed that Adelaide has now overtaken Hobart as the most affordable city in Australia, driven by lower housing and food

costs156.

The high cost of property in Australia makes households vulnerable to any sort of economic

shock157. While low-income households have lower housing costs, on average, than all

households, their housing costs represent a greater proportion of their gross weekly

income, which may result in housing affordability difficulties. Cost pressures associated with

151 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08; State and Territory Data Cube: Table 22

and Housing Occupancy and Costs, 2007–08 Data Cube: Table 3 (cat. no. 4130.0) 152 Australian Bureau of Statistics, Australian Social Trends, Housing National Summary Data Cube, Dec 2010

(cat. no. 4102.0) 153 Commonwealth Bank media release 26 May 2011: ‘Housing Affordability Enjoys Temporary Respite’. See

http://economics.hia.com.au/media/HIA%20National%20Release%20March%20Qtr%202011.pdf, viewed 30/06/11 154 Commonwealth Bank, Housing Affordability Index: Affordability Report, Sep quarter 2010. See

http://economics.hia.com.au/media/2010-09%20Affordability%20Report.pdf, viewed 30/06/11 155 ANZ Housing Snapshot, 24 January 2011, p.8 156 See http://www.studyadelaide.com/News/2011/05/27/Adelaide-is-Australias-most-affordable-city.aspx, viewed 30/06/11 157 ABC News: “Aussie houses are world's most overpriced”, 04/03/11

http://economics.hia.com.au/media/HIA%20National%20Release%20March%20Qtr%202011.pdf

http://economics.hia.com.au/media/2010-09%20Affordability%20Report.pdf

http://www.studyadelaide.com/News/2011/05/27/Adelaide-is-Australias-most-affordable-city.aspx

36

housing are also being felt by middle and high income households due to the high price of

homes and rises in interest rates. Although Tasmanian households as a whole spent a

lower proportion of average weekly expenditure on housing than other states/territories in 2003-04158, increases in current housing costs were a major contributor to inflation between

2000 and 2010159.

Housing availability is also a critical issue. A shortage of appropriate, affordable housing may

force some people into uncomfortable living arrangements and others into homelessness.

Rental

In 2007-08, more than one-quarter (26.5%) of all Tasmanian households rented their home.

The majority of renter households were renting from a private landlord (17.2%), while 6.9%

rented from the state housing authority. In comparison, 29.7% of Australian households rented their home: 23.9% rented from a private landlord and 4.5% rented from a

state/territory housing authority160.

Vacancy rates in Tasmania remain low. In February 2011, the vacancy rate was 2.5%, indicating a strong demand for rental accommodation. In Hobart, the vacancy rate in March

2011 remained steady at 2.4%, while in Launceston it rose 0.2% to 2.1% and fell 0.4% to

2.9% in the North-West161.

In March 2011, the median rental price for a two bedroom unit was $270 per week in Hobart, $210 per week in Launceston and $200 per week in the North West. The median

rental price for a three bedroom house was $340 per week in Hobart, $295 in Launceston

and $250 per week in the North West162.

Public Rental

In the 12 months ending 30 June 2010, there were 3 179 applicants on the waiting list for

public housing, compared with 3 039 in 2009, 2 733 in 2008, and 2 625 in 2007. This

represented a 4.6% increase from the previous year, and a 21.1% increase over the four year period from 2007163. Of these applicants, 918 were housed in 2010, compared to 883

in 2009, 1 010 in 2008 and 1 146 in 2007164. In 2008-09, the average waiting time for

priority applicants for public housing was 22.0 weeks. This was up from 20.2 weeks in 2007-08165.

Public housing rental costs are limited to rental payments, or Tenant Contribution, the

amount of which is determined by household income. Until recently, rent varied between

10% and 30% of household income. However, the 2011-12 State Budget announced that a new flat rental rate will be set at 25% of assessable household income, in line with other

states/territories.

158 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue):

Table 25 (cat. no. 6530.0) 159 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Table 5 (cat. no. 6401.0) 160 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08; State and Territory Data Cube: Table 22

and Housing and Occupancy Data Cube: Table 3 (cat. no. 4130.0) 161 @home Property Management Solutions: Rental Market Update 2011. See

http://www.athomepm.com.au/content/rental-market-update-2011, viewed 15/06/11 162 ibid. 163 Department of Health and Human Services (DHHS), Your Health and Human Services: Progress Chart August 2010,

p.15 164 Ibid, p.14 165 Tasmania Together Indicator 1.1.6: Public Housing waiting times for priority applicants. See www.benchmarks.com.au

http://www.athomepm.com.au/content/rental-market-update-2011

37

Private Rental

In the March quarter 2011, compared to other capital cities in Australia, Hobart was the

second most affordable capital city to rent a house, with a median weekly rent of $340

(compared with an average of $380 for all capital cities). Adelaide was the most affordable at $330 per week. Darwin was the most expensive capital city in Australia to rent a house

with a median weekly rent of $520, followed by Canberra at $500 and Sydney at $450166.

Hobart offered the most affordable unit rents at $280 per week (compared with an

average of $375 for all capital cities), followed by Adelaide at $290 per week. Sydney and Darwin had the most expensive unit rents at $430 per week, followed by Canberra at $425

per week167.

Over the past five years, the average annual increase for house rents in Australia was 7.1% and 7.9% for units168. Demand for units has grown, particularly in inner city areas, and this

has contributed to a tightening market and increases in rents169. However, higher rents

have also had the effect of forcing some people to move further out, to the more

affordable urban fringe adding pressure to transport infrastructure and services, which may

be less than adequate170.

Home Owners with a Mortgage

In 2007-08, 34.9% of Tasmanian households were home owners with a mortgage, compared with 35.1% nationally171. The median amount of a mortgage outstanding in

Tasmania was $90 000, compared with $150 000 nationally, while the median value of a

dwelling was $270 000 in Tasmania, compared with $400 000 nationally172.

Following a series of increases during 2010, rising interest rates were the biggest cause for concern for home owners with a mortgage across Australia in 2010, but in 2011, with

interest rates holding steady, this was overtaken by concerns about the rising cost of living.

In particular, the rising cost of food, petrol and housing has strained household resources173.

In 2011, one in five (21%) borrowers in Australia found it difficult to meet their mortgage

repayments. This was up from 15% in 2010174. Of borrowers struggling to meet their

repayments, 66% cited the rising cost of living as the main problem, compared with 51% who cited rising interest rates175. As a result, buyers have become more conservative in

their borrowing, and are less willing to take on excessive debt. In 2011, only 29% of

166 Rpdata.com Rental Review, March quarter 2011. See

http://www.rpdata.net.au/news/pdfs/quarterly_rental_review_mar_11.pdf, viewed 09/06/11 167 Ibid 168 Ibid 169 Rental growth returning: RP Data, See http://www.financebroker.com.au/aussie-mortgage-masters-clarkson/article/rental-growth-returning-rp-

data/, viewed 09/06/11 170 ABC News: “Housing shortage to drive up rent in 2011”, 28/01/11 171 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08, Housing Occupancy and Costs, 2007–08

Data Cube: Table 25 (cat. no. 4130.0) 172 Ibid 173 Genworth Financial, Streets Ahead: Genworth Homebuyer Confidence Index, March 2011 • Second Edition, p.4. The report

and biannual index detail current and historical confidence levels among Australian homebuyers and aspiring borrowers

based on surveys of more than 13 000 Australians between 2005 and 2011. The components used to create the

Genworth Homebuyer Confidence Index (HCI) are:

1. Proportion of monthly income currently used to service debts

2. Maximum loan-to-value ratio (LVR) comfortable in borrowing

3. Last 12 months repayment history

4. Next 12 months repayment history

5. Whether it is a good time to buy a home. 174 Genworth Financial, Streets Ahead: Genworth Homebuyer Confidence Index, March 2011 • Second Edition, p.8 175 Ibid, p.10

http://www.rpdata.net.au/news/pdfs/quarterly_rental_review_mar_11.pdf

http://www.financebroker.com.au/aussie-mortgage-masters-clarkson/article/rental-growth-returning-rp-data/

http://www.financebroker.com.au/aussie-mortgage-masters-clarkson/article/rental-growth-returning-rp-data/

38

borrowers were willing to borrow more than 80% of the property value, down from 39%

in 2010176.

Households may be said to be experiencing mortgage stress if mortgage repayments consume 30% or more of household income177. This leaves little money to spend on other

goods and services. In March 2010, 13 263 or 8.6% of Tasmanian households reported

mortgage stress, compared with 8.1% nationally. Of these 8 016 or 5.2% experienced mild

mortgage stress (which meant that they were maintaining repayments by reprioritising

expenditure, borrowing more on loans or credit cards, and refinancing178), while 5 247 or

3.4% reported severe mortgage stress (which meant that they were behind on their

repayments, were trying to sell or refinance, or were being foreclosed179). More young growing families (18.9%) experienced mortgage stress than other groups surveyed, followed

by battling urban households (17.3%) and households on the disadvantaged fringe

(16.3%)180.

Nationally, 17.5% of young growing families reported mortgage stress, followed by

households on the disadvantaged fringe (15.0%), and battling urban households (14.6%)181.

About 40% of first home buyers who entered the market during 2008-09 reported some

degree of mortgage stress182.

Median house prices in Hobart have fluctuated over recent years. In March 2010, they

reached their highest level in two years ($380 500). This represented an annual increase of

20.8%, the highest annual increase since December 2003. For the September quarter 2010,

the median house price for Tasmania dropped to $310 000. At this time, there were five

Local Government Areas (LGAs) that recorded a median house price higher than the state

median: Clarence, Glamorgan/Spring Bay, Hobart, Kentish and Kingborough. The three most expensive suburbs in Tasmania were Sandy Bay, Acton Park and Bellerive, while the

three least expensive were Smithton, Ravenswood and George Town. The number of

house sales in Tasmania dropped by 23.2% in the year to the September quarter 2010.

However, while the number of sales declined over this twelve month period, house prices

remained relatively stable due to a shortage of properties183.

In March 2011, the median value in Hobart rose again, to $365 000, while Launceston had a

median of $285 000184.

Home Owners without a Mortgage

In 2007-08, 36.4% of Tasmanian households were home owners without a mortgage,

compared with 33.2% nationally. Compared with other states/territories, this was the

second highest proportion of outright home ownership after Victoria (36.7%)185.

Research has found that home owners are more likely to be older, wealthier and insured

against risk186. Of the 3.0 million Australians aged 45 years and over who were retired from

176 Ibid, p.4 177 Fujitsu Mortgage Stress Report, March 2010, p.3 178 Ibid 179 Ibid 180 Fujitsu Mortgage Stress Report, March 2010, State Summary Data – Tas, p.26 and All States Summary Data, p.20 181 Ibid, p.20 182 Ibid, p.26 183 Real Estate Institute of Tasmania (REIT), September Quarter Property Report, 1 November 2010 184 Residex, March 2011, My Property Hunter: Property Info – Tasmania Property. See

http://www.mypropertyhunter.com.au/news_property.html, viewed 21/06/11 185 Australian Bureau of Statistics 2009, Housing Occupancy and Costs, 2007-08, Housing Occupancy and Costs, 2007–08

Data Cube: Table 25 (cat. no. 4130.0) 186 Insurance Council of Australia, The non-insured: who, why and trends, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.12

http://www.mypropertyhunter.com.au/news_property.html

39

the labour force in 2008-09, more than three-quarters (76%) were home owners without a

mortgage187.

Maintenance

In 2003-04, Tasmanian households spent on average $9.44 per week on repairs and maintenance payments to contractors and $10.85 on materials for repairs and maintenance.

Of the average weekly expenditure on current housing costs, repairs and maintenance

payments to contractors accounted for 9.5% (the same as nationally) and materials

accounted for 11.0%* (compared with 4.9% nationally)188.

Of average weekly expenditure on repairs and maintenance payments to contractors,

Tasmanian households spent 55.2% ($5.21) on plumbing. This was the highest proportion

of all states/territories, and was above the national average of 23.6%189.

Furnishings/whitegoods

In 2003-04, Tasmanian households spent on average $47.55 on household furnishings and

equipment per week190. This represented 6.3% of total household expenditure on goods

and services, and was higher than the national average of 5.8%191.

Of average weekly expenditure on household furnishings and equipment, 46.2% was spent

on furniture and floor coverings, 18.5% on household appliances, 13.8% on blankets,

household linen and household furnishings, 13.1% on tools and other household durables, and 8.3% was spent on glassware, tableware, cutlery and household utensils192.

Of weekly household expenditure on household appliances, 80.3% was spent on

whitegoods and other electrical; appliances (excluding stoves and related). This was similar

to the national average of 80.0%. However, Tasmanian households differed to the national average in the proportion spent on particular types of whitegoods. Of expenditure on

whitegoods193:

29.9% was spent on whitegoods and other electrical appliances not elsewhere classified, compared with 30.1% nationally;

22.5% was spent on dishwashers, compared with 8.9%;

20.6% was spent on refrigerators and freezers, compared with 28.3% nationally;

15.0% was spent on washing machines, compared with 18.6% nationally;

11.7% was spent on air-conditioners, compared with 11.1% nationally; and

187 Australian Bureau of Statistics 2009, Retirement and Retirement Intentions, Australia, Jul 2008 to Jun 2009 (cat. no. 6238.0) 188 *Estimate has a relative standard error of between 25% and 50% and should be used with caution. Average weekly

household expenditure on repairs and maintenance payments to contractors includes repainting, electrical work, plumbing,

reroofing, and repairs and maintenance not elsewhere classified. For further details on household expenditure groups, see

Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue):

Table 5 (cat. no. 6535.0.55.001) 189 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001) 190 Average weekly household expenditure on household furnishings and equipment includes furniture and floor coverings;

blankets, household linen and furnishings; household appliances (including whitegoods); glassware, tableware, cutlery and

household utensils; tools and other household durables (such as lawnmowers, gardening, power and other tools, mobile

phones and answering machines). For further details on household expenditure groups, see Australian Bureau of Statistics

2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue): Table 5 (cat. no.

6535.0.55.001) 191 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001) 192 Ibid 193 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue): Table 5 (cat. no. 6535.0.55.001)

40

0.3% was spent on clothes dryers, compared with 3.0% nationally.

House and Contents Insurance

In 2003-04, Tasmanian households spent on average 6.9% of their weekly expenditure on current housing costs on house and contents insurance, compared with 5.6% nationally.

This was the equal highest proportion of all states/territories, along with South Australia194.

Affordability and tenure are key drivers of non-insurance. Non-insurance tends to decline

with higher incomes, while owners with a mortgage were more likely to take out building insurance than households of other tenure types195. While Tasmania has a high rate of

home ownership, in 2003-04, 5% of households (approximately 7 200 owner occupied

households) did not have building insurance196. Households in the bottom two income quintiles accounted for three-quarters (74%) of these uninsured households. That means

that these households were exposed to a greater financial risk and were more vulnerable to

loss should a catastrophic event affect their home197:

At the same time, almost one-quarter (24%) of Tasmanian households (approximately

47 000 households) did not have contents insurance198. Despite the fact that contents

insurance is not dependent on tenure, but is available to anyone with household contents

to insure, renters were found to be the least likely to have contents insurance199. In 2007-08, 26.5% of Tasmanian households were renters (17.2% from a private landlord, 6.9% from

the state housing authority, and 2.5%* from other landlord type), compared with 29.7%

nationally (23.9% from a private landlord, 4.5% from a state/territory housing authority, and 1.3% from other landlord type)200.

Households on lower incomes were less likely to have both building and contents

insurance. Non-insurance was found to be associated with younger households, those with lower levels of education, those without full-time work, single parent households, retirees

with a mortgage, people from non-western countries, and urban households. While the

cost of insuring may outweigh the perceived benefits to households, those who are least

able to afford it become more exposed in the event of loss.

The cost of insurance includes not only the premium but also the add-on transaction costs

and taxes. Three taxes are commonly applied to general insurance premiums in Australia:

stamp duty, which applies to all general insurance products, Fire Service Levy (FSL) which is applied to home insurances in selected states, and the Goods and Services Tax (GST).

These taxes are applied on top of each other, resulting in a cumulative total that varies

between 18% and 45% on top of pre-tax premiums, across jurisdictions201.

State taxes on home insurance premiums, April 2007

NSW Vic. Qld SA WA Tas. NT ACT

194 Ibid 195 Insurance Council of Australia, ‘The non-insured: who, why and trends’, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.31 196 Building insurance is only applicable for home-owners whose dwelling is not insured by a body corporate. See

Insurance Council of Australia, ‘The non-insured: who, why and trends’, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.4 197 Insurance Council of Australia, Submission to the Tasmanian State Taxation Review, Feb 2011, pp.8-9 198 Ibid 199 Insurance Council of Australia, ‘The non-insured: who, why and trends’, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.4 200 *Estimate has a relative standard error of 25% to 50% and should be used with caution. See Australian Bureau of

Statistics 2009, Household Income and Income Distribution, Australia, 2007-08; SIH 2007-08 Detailed tables: Table 16A (cat.

no. 6523.0) 201 Insurance Council of Australia, The non-insured: who, why and trends, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.28

41

Stamp duty % 9 10 7.5 11 10 8 10 10

GST % 10 10 10 10 10 10 10 10

FSL % 19 19** nil nil nil nil nil nil

Cumulative

total

% 44* 44** 18 22 21 19 21 21

Source: Insurance Council of Australia

*Includes Insurance Protection Tax (IPT) of 1%

**Metro Victoria FSL rate is 19%, resulting in a cumulative total of 44%. Country Victoria rate is 20%, resulting in a

cumulative total of 45%.

A study into non-insurance commissioned by the Insurance Council of Australia202 found

that State Government based insurance taxes had an effect on non-insurance. States with

higher tax rates on insurance premiums had higher rates of non-insurance for both building and contents insurance. In Tasmania, stamp duty and GST apply to general insurance

premiums. These taxes203 add 19% to the cost of obtaining insurance cover and may lead

to households being either under-insured or uninsured. In its submission to the 2011 State

Taxation Review, the Insurance Council of Australia found that lower income households

spent a higher proportion of their income on insurance, compared with households on

higher incomes. As a result, lower income households were subjected to a higher tax burden through the purchase of general insurance premiums than households on higher

incomes204, and consequently were at a higher risk of being under-insured or uninsured.

While stamp duty in Tasmania was lower than most of the other jurisdictions, Tasmanian

households also had lower average equivalised disposable incomes ($659 per week compared with $811 nationally)205.

A 2001 national survey conducted by NRMA Insurance206 found that, of non-insured

Australian households, almost one-quarter (22%) reported that “insurance is too expensive” was the main reason, while 30% stated that they would be “much more likely” to take out

insurance if taxes were reduced207. Households that lack assets have no buffer to financial

shocks, which can lead to financial vulnerability and insecurity. Insurance is key to reducing

vulnerability, but take-up is low, particularly by low-income groups.

Financial Stress

The 2006 ABS General Social Survey indicated that, of the different tenure types, financial

stress was highest for people renting with the state housing authority. More than half

(54.9%) of people renting public housing were unable to raise $2,000 within a week for something important, while 38.3% had experienced at least one cash flow problem in the

last 12 months. A comparatively low proportion (16.6%) of people had taken a dissaving

action in the last 12 months208.

In 2006, Tasmanian households renting from a private landlord had the most cause to

spend their savings (33.8%), compared with owners with a mortgage (19.5%), renters from

202 Ibid, p.4 203 Over 50% of all Tasmanian tax revenue is drawn from payroll taxes and stamp duties on the transfer of property.

Other significant sources of taxation revenue include taxes on insurance (including stamp duties

and insurance company contributions to the fire services), land taxes and gaming taxes. See Insurance Council of Australia,

Submission to the Tasmanian State Taxation Review, Feb 2011, p.4 204 Insurance Council of Australia, Submission to the Tasmanian State Taxation Review, Feb 2011, p.10 205 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia, 2007-08; SIH 2007-08 Detailed

tables: Table 16A (cat. no. 6523.0) 206 NRMA Insurance (2001), Home and Motor Vehicle Insurance: A Survey of Australian Households (October 2001),

Research commissioned by NRMA Insurance in relation to household non-insurance.

http://www.iag.com.au/pub/iag/results/submissions/media/20010611a.pdf 207 Insurance Council of Australia, The non-insured: who, why and trends, Prepared by Dr Richard Tooth and Dr George

Barker, Centre of Law and Economics, Australian National University, May 2007, p.30 208 Australian Bureau of Statistics 2007, General Social Survey, Tasmania, 2006: Table 20 (cat. no. 4159.6.55.001)

42

the state housing authority (16.6%) and owners without a mortgage (10.2%). This indicates

that one-third of households renting from a private landlord were experiencing financial

stress209.

FINANCIAL STRESS, by Household tenure and landlord type, Tasmania, 2006

COST OF TRANSPORT

Prices: National context


transportation210 prices for the weighted average of eight capital cities increased by 9.9%. This was below the national inflation rate, which increased by 16.3% over the same

period211.

CONSUMER PRICE INDEX, Weighted average of eight capital cities, March quarter 2006

to March quarter 2011

209 Ibid 210 Transportation goods and services priced in the 15th series CPI include urban transport fares (bus, train, ferry, tram and

taxi fares) and private motoring, such as motor vehicles purchase and long term hire, repair and servicing, parts and

accessories, automotive fuel, and other motoring charges (motor vehicle registration, driver licence fees, parking fees,

driving lessons, and tollway charges). See Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th

Series; Appendix 2 (cat. no. 6440.0) 211 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Tables 3 and

4 (cat. no. 6401.0)

43

Prices: State context


price of transportation for Hobart increased by 7.1%. This was below the inflation rate for

Hobart, which increased by 14.9% over the same period212.


Of the transportation subgroups for Hobart, urban transport fares increased by 19.5% while

private motoring increased by 6.7%. This meant that urban transport fares increased at

more than double the rate of private motoring during this time213.

Transportation expenditure classes214 which experienced the highest increases over this ten

year period were motor vehicle parts and accessories (+24.4%), followed by urban

transport fares (+19.5%), other motoring charges such as motor vehicle registration, drivers licence fees, parking fees, driving lessons and tollway charges (+14.1%), automotive fuel

(+11.8%), and motor vehicle repair and servicing (+11.5%). The price of motor vehicle

purchase and long term hire/lease of new cars and motorcycles decreased by 2.5% during this period215.

212 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0) 213 Ibid 214 Examples of item coverage are provided in Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index,

15th Series; Appendix 2 (cat. no. 6440.0) 215 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0)

44

TRANSPORTATION EXPENDITURE CLASSES, Consumer Price Index, Hobart, March

quarter 2006 to March quarter 2011

Private motoring: motor vehicle registration costs216

The average cost to renew a 12 month registration for a 4 cylinder light vehicle217 in

Tasmania at March 2011 was $541.55. Compared to other states/territories, this was the

second cheapest after Western Australia, where a 12 month registration renewal cost

$456.06. The Australian Capital Territory had the most expensive vehicle registration at $

781.20. See Appendix 2 for price comparison.

Light Vehicles can be registered for 6 or 12 months. Additional charges apply for registering

vehicles for periods of less than 12 months218. Hence, while paying registration six monthly

may appear to be an attractive and more affordable short-term solution, it is more costly in

the longer term. Despite this, a snapshot of currently registered vehicles taken on 8/04/11

by registration period selected last time the vehicle was renewed revealed that the owners

of 26% of vehicles in the fleet chose to renew for 6 months. If considering cars and station-

wagons only, 35% of owners chose the six month option219.

Similarly, driver licence renewal fees may appear to be more affordable to pay one year at a

time, but drivers will pay almost 50% more over a five year period in Tasmania by choosing this option rather than paying for the five year renewal at the outset. A one year renewal

costs $43.45 compared to $97.55 for a five year renewal220. See Appendix 2 for driver

licence fee structure.

People aged 65 years and over are exempt from the licence renewal fee. These customers

only pay $9.15 for the Driver Licence Photo card. A range of other fees may apply, such as

licence assessment fees, duplicate licence fees and licence upgrade fees221.

216 Department of Infrastructure, Energy and Resources (DIER): http://www.transport.tas.gov.au/fees, viewed 17/03/11 217 Class “A” light vehicles include motor cars such as a sedan, station wagon or camper van, and goods carrying vehicles

with a GVM < 3 tonnes, such as a ute, van etc. See Department of Infrastructure, Energy and Resources (DIER):

http://www.transport.tas.gov.au/fees/calculation_of_fees_-_class_a_vehicles, viewed 17/03/11 218 Department of Infrastructure, Energy and Resources (DIER):

http://www.transport.tas.gov.au/fees/4_formula_to_calculate_fees,_m.a.i.b.__and__motor_tax_for_periods_either_greater_

than_or_less_than_12_months, viewed 17/03/11 219 Department of Infrastructure, Energy and Resources (DIER), Registration & Licensing Branch, Data available on request 220 Department of Infrastructure, Energy and Resources (DIER):

http://www.transport.tas.gov.au/fees/other_driver_licence_fees, viewed 17/03/11 221Ibid

http://www.transport.tas.gov.au/fees

http://www.transport.tas.gov.au/fees/calculation_of_fees_-_class_a_vehicles

http://www.transport.tas.gov.au/fees/4_formula_to_calculate_fees,_m.a.i.b.__and__motor_tax_for_periods_either_greater_than_or_less_than_12_months

http://www.transport.tas.gov.au/fees/4_formula_to_calculate_fees,_m.a.i.b.__and__motor_tax_for_periods_either_greater_than_or_less_than_12_months

http://www.transport.tas.gov.au/fees/other_driver_licence_fees

45

Comparison of average retail petrol prices

Over the last five years, from the March quarter 2006 to the March quarter 2011, Hobart

has consistently had higher than average retail petrol prices. In the March quarter 2006, the

price in Hobart of unleaded petrol was 126.5 cents per litre. This was the second most expensive capital city after Darwin at 127.6 cents per litre. Brisbane had the cheapest

unleaded petrol at 113.5 cents per litre222.

Since this time, Hobart has consistently been the second most expensive capital city (after

Darwin) in terms of unleaded petrol prices. In the March quarter 2011, the price of unleaded petrol in Hobart was 141 cents per litre. Darwin had the most expensive

unleaded petrol at 142 cents per litre, while Adelaide had the cheapest at 134 cents per

litre223.

Tasmanian households spent the most of all states and territories on motor vehicle fuel,

lubricants and additives on average per week (28.7%), above the national average of

23.6%224.

MOTOR VEHICLE FUEL, LUBRICANTS AND ADDITIVES, average weekly household

expenditure, 2003-04

Public Transport

Tasmanian households spent the lowest proportion of average weekly expenditure on

public transport fares (0.8%). This was below the national average of 2.8%225.

222 Australian Bureau of Statistics 2006, Average Retail Prices of Selected Items, Eight Capital Cities, Mar 2006 (cat. no.

6403.0.55.001) 223 Australian Bureau of Statistics 2011, Average Retail Prices of Selected Items, Eight Capital Cities, Mar 2011 (cat. no.

6403.0.55.001) 224 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue); Detailed Expenditure Data Items Data Cube: Table 5 (cat. no. 6535.0.55.001) 225 Ibid

46

PUBLIC TRANSPORT FARES, average weekly household expenditure, 2003-04

Expenditure

In 2003-04, average weekly household expenditure on transport226 in Tasmania was $128

per week representing 16.9% of total household expenditure. This was up from 16.0% in

1998-99227. Tasmanian households spent a higher proportion of average weekly

expenditure on transport than any other goods or services except food228.


Compared to other states/territories, Tasmanian households spent a higher proportion of

weekly expenditure on transport. This was higher than the national average of 15.6%229.

226 Average weekly household expenditure on transport goods and services includes motor vehicle and other vehicle

purchase, fuel, lubricants and additives, registration and insurance, parts and accessories, other vehicle charges, public

transport fares, and fares and freight charges. For further details on HES groups, see Australian Bureau of Statistics 2006,

Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 227 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Detailed Expenditure Items, 1998-99; State

and Quintile Detailed Tables Data Cube: Table 5 (cat. no. 6535.0) 228 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue); Table 5 (cat. no. 6535.0.55.001) 229 Ibid

47

TRANSPORT, Average weekly household expenditure, 2003-04

Of the weekly household expenditure in Tasmania on transport, most was spent on motor

vehicle purchase (33.6%), followed by fuel, lubricants and additives (28.7%), and registration

and insurance (15.6%). The least amount was spent on public transport fares (0.8%)230.

TRANSPORT, Average weekly household expenditure, Tasmania, 2003-04

Who spends more on transport?

Increases in the basic cost of living can have a major impact on living standards for different

groups. Some groups tend to spend a greater proportion of their income on transport,

depending on a number of factors including home location, accessibility to public transport,

and stage of the lifecycle. When transport prices rise relative to other goods and services, these households face greater increases in their overall living costs.

Nationally, an analysis by Currie and Senbergs231 based on the ABS 2003-04 Household

Expenditure Survey looked at relative household expenditure on motor vehicles by income

quintile. Their findings indicated that low-income households232 in Australia:

Spend substantially less on motor vehicle purchase than other income groups;

Have substantially higher expenditure on fuel and lubricants;


(Reissue); Detailed Expenditure Data Items Data Cube: Table 5 (cat. no. 6535.0.55.001) 231 Currie, G. and Senbergs, Z., ‘Exploring Forced car ownership in metropolitan Melbourne’, 30th Australasian Transport

Research Forum, 25-27 Sep 2007, p.8 232 Households falling in the second and third equivalised disposable household income deciles. See Australian Bureau of

Statistics 2009, Household Income and Income Distribution, Australia, 2007-08, Explanatory Notes (cat. no. 6523.0)

48

Have relatively high expenditure on motor vehicle registration and insurance; and

Have slightly lower average expenditure on motor vehicle parts and accessories.

These findings were consistent with the Tasmanian experience: Tasmania has the oldest

fleet of cars in the nation, and a high proportion of low-income households that have less

capacity for discretionary spending. As a result, fixed costs such as car registration, tend to absorb a higher proportion of total expenditure relative to income.

In Tasmania, the average weekly expenditure on transport for all households equated to

16.9% of total expenditure in 2003-04, but some household types spent disproportionately more than the state average. These included:

Households whose principal source of income was private unincorporated business spent 21.9%233;

Households where the reference person was aged 25-34 years spent 20.0%234;


Couple families with dependent children spent 18.8%236;


Home owners with a mortgage spent 18.3%238;

Households whose principal source of income was wages and salaries spent 17.3%239;

and

Low-income households spent 17.1%240.

Single parent families spent a lower proportion than the state average on transport

(15.9%)241, as did households dependent on government pensions and allowances

(15.6%)242, and people renting from the state housing authority (10.3%)243.

233 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue); Tas

Data: Table 9 (cat. no. 6530.0) 234 Ibid 235 Ibid 236 Ibid 237 Ibid 238 Ibid 239 Ibid 240 Households falling in the second and third equivalised disposable household income decile. See Australian Bureau of

Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue); Tas Data: Table 5 (cat. no.

6530.0) 241 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue); Tas

Data: Table 15 (cat. no. 6530.0) 242 Ibid 243 Ibid

49

TRANSPORT, Average weekly household expenditure, Selected Tasmanian households,

2003-04

Access to transport

For a state with a highly dispersed and ageing population such as Tasmania, transport is a particularly vital issue244:

At 30 June 2010, Tasmania had the highest proportion of all states/territories of the population living outside the capital city. More than half (57.7%) of the Tasmanian

population lived outside of the Hobart Statistical Division, compared with 54.7% of

people in Queensland, and 44.5% of people in the Northern Territory. The

Australian Capital Territory had the lowest proportion of people living outside the

capital city, at 0.1%. Nationally, 36.0% of the population lived outside a capital city245.

Tasmania's population has the oldest age structure of all the states/territories, and is ageing at a faster rate. Tasmania overtook South Australia in June 2007 and remained

the oldest state or territory at June 2009 with a median age of 39.6 years, compared

with 36.8 years nationally. At 30 June 2009, there were 76 900 people aged 65 years

and over in Tasmania, making up 15.3% of the population, compared with 13.3%

nationally. This was the second-highest proportion among the states/territories after

South Australia (15.4%). Of Tasmania's 27 Local Government Areas (LGAs) with a population above 2 000, there were 17 LGAs with a median age above that of the

state's median. The LGA of Glamorgan/Spring Bay on the east coast had the highest

proportion of people aged 65 years and over (22.9%) at June 2009, reflecting its popularity as a place to retire. This was followed by Break O'Day (20.0%), and

Tasman (18.9%)246.

In Tasmania in 2006, 88.1% of people aged 18 years and over reported that they felt they

could easily get to the places they needed to go (a broad measure of access to transport).

However, only 77.5% of people in the lowest income quintile, 73.3% of one parent families,

71.5% of people with a core activity restriction (disability) could easily get to the places

244 Adams, D. 2009, A Social Inclusion Strategy for Tasmania; Appendix 1: The Evidence for Social Inclusion in Tasmania, p.A1.71 245 Australian Bureau of Statistics 2011, Regional Population Growth, Australia, 2009-10 (cat. no. 3218.0) 246 Australian Bureau of Statistics 2010, Population by Age and Sex, Regions of Australia, 2009 (cat. no. 3235.0)

50

needed, indicating that some groups still face barriers to accessing transport247. Although

directly comparable data for 2006 is not available for Tasmanian Aboriginal people, in 2002,

only 78.0% of Tasmanian Aboriginal people aged 15 years and over reported that they could easily get to places needed248.

Australia has high levels of urban sprawl and sparsely settled areas. Transport issues are

therefore particularly important and strongly linked to urban planning and infrastructure

issues. This has led to Australia becoming highly car dependent, with the associated

problems of congestion, pollution and disadvantage for those unable to afford a car249.

While the major cities have significantly lower car-ownership rates than the rest of Australia,

with public transport use concentrated in the larger cities250, Tasmanians are highly dependent on private car use. Compared to other states/territories, Tasmania has a high

rate of motor vehicle ownership. At 31 March 2010, Tasmania had the second highest rate

of motor vehicle ownership, with 809.0 vehicles per 1 000 residents, after Western

Australia (818.0). The Northern Territory had the lowest rate with 589.4 vehicles per

1 000 residents. Nationally, there were 721.1 motor vehicles per 1 000 resident

population.

Car ownership in Tasmania has been steadily increasing since 1987251. Over the five year period 31 March 2005 to 31 March 2010, Tasmania’s rate of motor vehicle ownership

increased 61.9 vehicles252 per 1 000 residents, compared to 34.8 nationally253.

MOTOR VEHICLE FLEET PER POPULATION (a), State/territory of registration

The 2010 Motor Vehicle Census (MVC) showed that passenger vehicles accounted for 70.9% of all registered Tasmanian vehicles, followed by light commercial vehicles (20.7%)

and motor cycles (3.5%)254.

Between 31 March 2005 and 31 March 2010, increases in motor cycle registrations were

observed in all states and territories, with Western Australia recording the largest

percentage increase (77.0%), followed by the Northern Territory (74.8%). The smallest

247 Australian Bureau of Statistics 2007, General Social Survey, Tasmania, 2006 (cat. no. 4159.6.55.001) 248 Adams, D. 2009, A Social Inclusion Strategy for Tasmania; Appendix 1: The Evidence for Social Inclusion in Tasmania, p.A1.71 249 Ibid 250 The State of Australian Cities 2010 Report, Chapter 1 251 Adams, D. 2009, A Social Inclusion Strategy for Tasmania; Appendix 1: The Evidence for Social Inclusion in Tasmania, p.A1.71 252 At 31 March 2010 there were 809.0 vehicles per 1 000 residents in Tasmania, compared with 747.1 at the end of

March 2005. See Australian Bureau of Statistics 2011, Motor Vehicle Census, Australia, 31 March 2010; Table 2 (cat. no.

9309.0) 253 At 31 March 2010 there were 721.1 vehicles per 1 000 residents in Australia, compared with 686.3 at the end of

March 2005. See Australian Bureau of Statistics 2011, Motor Vehicle Census, Australia, 31 March 2010; Table 2 (cat. no.

9309.0) 254 Australian Bureau of Statistics 2011, Motor Vehicle Census, Australia, 31 March 2010; Table 1 (cat. no. 9309.0)

51

percentage increase was in Victoria where registrations of motor cycles at 31 March 2010

were 45.4% above those recorded 5 years earlier. In Tasmania, motor cycle registrations

increased by 51.4% (compared with 56.5% nationally). This was the largest increase of any vehicle type for Tasmania, and may be as a result of increased fuel prices and general costs

associated with purchasing and running a vehicle. People may see motorcycles as a

cheaper, more affordable private transport option than cars, especially motorcycles equal to

or less than 125 CC255.

TYPE OF VEHICLE, Tasmania, percentage change – between Census years 2005 and 2010

The 2006 Census of Population and Housing found that 91.0% of occupied private

dwellings in Tasmania had at least one motor vehicle, compared with 90.2% nationally. Of

occupied dwellings in Tasmania, 37.4% had one motor vehicle, 36.6% had two motor vehicles, 11.7% had three motor vehicles and 5.4% had four or more motor vehicles256.

Almost one in 10 occupied private dwellings (9.0%) did not have a motor vehicle257. LGAs

with the highest proportions of households lacking a motor vehicle included the urban

LGAs of Hobart (13%), Glenorchy (14%) and Launceston (12%), but also the more remote LGAs of West Coast and Flinders Island (both had 11% of households with no motor

vehicle)258.

At 31 March 2010, the average age of all vehicles registered in Australia was 10.0 years. Tasmania had the oldest vehicle fleet of all states/territories with an average age of 11.9

years, with 30.2% of vehicles manufactured before 1995. This was followed by South

Australia with an average age of 11.1 years, and 25.4% manufactured before 1995. The Northern Territory had the youngest fleet in Australia with an average age of 8.8 years, and

16.8% of vehicles manufactured before 1995259.

255 Department of Infrastructure, Energy and Resources (DIER): http://www.transport.tas.gov.au/fees/calculation_of_fees_-

_motorcycles, viewed 17/03/11 256 Australian Bureau of Statistics 2007, Census of Population and Housing, 2006 Census: Basic Community Profile; Table B29

(cat. no. 2001.0) 257 Australian Bureau of Statistics 2010, Tasmanian State and Regional Indicators, Sep 2010:Transport (cat. no. 1307.6) 258 Adams, D. 2009, A Social Inclusion Strategy for Tasmania; Appendix 1: The Evidence for Social Inclusion in Tasmania, p.A1.72 259 The Motor Vehicle Census relates to all vehicles which were registered with a motor vehicle registration authority at 31

March 2010. The Census includes vehicle types comprising passenger vehicles, campervans, light commercial vehicles, all

types of trucks, buses and motorcycles, but excluded vintage and special interest vehicles. See Australian Bureau of

Statistics 2011, Motor Vehicle Census, Australia, 31 March 2010 (cat. no. 9309.0)

http://www.transport.tas.gov.au/fees/calculation_of_fees_-_motorcycles

http://www.transport.tas.gov.au/fees/calculation_of_fees_-_motorcycles

52

COST OF EDUCATION



education260 prices for the weighted average of eight capital cities increased by 27.7%. This

was the third highest price increase over this period, after alcohol and tobacco (+30.2%) and housing (+28.4%), and was above the national inflation rate, which increased by 16.3%

over the same period261.





price of education for Hobart increased by 22.1%. This was above the inflation rate for

Hobart, which increased by 14.9% over the same period262.

260 Education goods and services priced in the 15th series CPI include private and government preschool and primary

education fees, private and government secondary education fees, and private and government tertiary education fees.

See Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th Series; Appendix 2 (cat. no. 6440.0) 261 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011; Time Series Spreadsheets: Tables 3 & 4

(cat. no. 6401.0) 262

Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011; Time Series Spreadsheets: Table 13 (cat. no. 6401.0)

53


Expenditure classes within the education group include both private and government

education fees. The greatest movement over the last five years occurred in the price of

secondary education fees, with an increase of 27.6%. The price of tertiary education fees

increased by 18.7% during this time, and the price of pre-school and primary education fees

increased by 15.4%263.

Expenditure

In 2003-04, Tasmanian household average expenditure on miscellaneous goods and

services264 was $61.59 per week, which represented 8.1% of total weekly household

expenditure265. This proportion was virtually unchanged from 1998-99, when miscellaneous

goods and services accounted for 8.2% of average weekly household expenditure266. In

2003-04, Tasmanian household average expenditure on miscellaneous goods and services

was below the national average of 8.9%267.

263 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011; Time Series Spreadsheets: Table 13 (cat.

no. 6401.0) 264 Average weekly household expenditure on miscellaneous goods and services includes education-related costs such as

primary and secondary schools fees (both government and independent); non-school education fees, such as TAFE course

fees, HECS, and private tuition fees. Non-education related expenditure includes miscellaneous goods such as jewellery

and travel goods, lay-by and interest payments on selected credit services, payments for other property, and fees, such as

legal, accountant, tax agent and union fees. Stationery equipment is also included under miscellaneous goods, but does

not relate specifically to education. See Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia:

Detailed Expenditure Items, 2003-04 (Reissue); Household Expenditure Survey, Australia: Detailed Expenditure Items Data

Cube: Table 5 (cat. no. 6535.0.55.001) 265 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04



and Quintile Detailed Tables Data Cube: Table 5 (cat. no. 6535.0) 267 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue);

Australia Data Cube: Table 25 (cat. no. 6530.0)

54


The miscellaneous goods and services expenditure group is comprised of268:

Miscellaneous goods, such as stationery items, jewellery, travels goods, baby goods,

Christmas decorations and lay-by, and

Miscellaneous services, such as education, interest paid on selected credit services,

payments for other property, various fees such as union, legal, tax agent and

accountant, plus fines, cash gifts and donations, and alimony and maintenance payments.

Miscellaneous goods accounted for $13.34 of average weekly household expenditure, while

miscellaneous services accounted for $48.25 per week. Of expenditure on miscellaneous services, education fees accounted for $11.37 per week. Primary and secondary school fees

accounted for $6.41 and $4.96 was spent on education fees covering HECS, TAFE course

fees and private education tuition fees269.

Compared to other states/territories, Tasmanian households spent 1.5% of average weekly

household expenditure on education. This was below the national average of 2.0%.

Victoria spent the most at 2.7%. Queensland and the Northern Territory spent the least at 1.4%270.



6535.0.55.001) 269 Ibid 270 Note: Estimates for Queensland, Northern Territory and the Australian Capital Territory have a relative standard error

of between 25% and 50% and should be used with caution. See Australian Bureau of Statistics 2006, Household

Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Household Expenditure Survey, Australia:

Detailed Expenditure Items Data Cube: Table 5 (cat. no. 6535.0.55.001)

55

EDUCATION, Average weekly household expenditure, 2003-04

Who spends more on miscellaneous goods and services (including education)?

Some household types spent disproportionately more than the state average of 8.1% on

miscellaneous goods and services (including education). These included271:

High income earners (10.6%);

One parent families with dependent children (10.5%);

Wage and salary earners (9.3%);

Home owners with a mortgage (8.6%); and

Couple families with dependent children (8.6%).

Note: ABS price and expenditure figures incorporate both public and private education

fees, but do not differentiate between them. Higher costs are generally associated with

private education.

Who is most affected by education costs?

Australia has three main types of schools:

Government (Public) – run by and funded by government.

Non-government (Independent or Private) – run privately but subsidised by the government.

Non-government (Catholic or Private) – run by Catholic Education and also

subsidised by government.

In 2010, across Australia, there were 6 743 government schools (71%), 1 708 Catholic

schools (18%), and 1 017 Independent schools (11%). In Tasmania, there were 202

government schools (75%), 37 Catholic schools (14%) and 29 Independent schools(11%)272.

In 2010, 71.6% of students in Tasmania attended government schools (compared with

65.6% nationally), 17.4% attended Catholic schools (compared with 20.3% nationally) and

11.0% attended independent schools (compared with 14.0% nationally). Compared to other states/territories, Tasmania had the second highest proportion of students attending

271 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue);

Tasmania Data Cube: Tables 5, 9, 13 and 15 (cat. no. 6530.0) 272 Australian Bureau of Statistics 2011, Schools, Australia, 2010: Table 31a (cat. no. 4221.0)

56

government schools after the Northern Territory (73.9%). The Australian Capital Territory

had the lowest at 57.1%273.

Over the five year period 2005 to 2010, the number of non-government students increased proportionally more than government students. Nationally, independent schools had the

largest increase (+14.4%), followed by Catholic schools (+6.0%), while the number of

students attending government schools increased by 1.6% over the same period. In

Tasmania, the number of students attending Catholic schools increased by 9.1% over this

five year period, the number of students attending independent schools increased by 5.4%,

while those attending government schools decreased by 4.8%274.

Compared to other states/territories, Tasmania was the only state to experience a net loss of students over the five year period 2005 to 2010. This is consistent with Tasmanian

demographic trends toward population ageing. The total number of students declined from

84 406 in 2005 to 83 082 in 2010, a loss of 1.6%. Nationally, student numbers increased by

4.1%275.

The number of non-government students has consistently increased at a greater rate than

for government students for all states/territories across Australia over the five year period

2005 to 2010. The Northern Territory had the biggest disparity, with non-government students increasing by 16.1% compared with a slight decline in the number of government

students (-1.8%). Overall, Queensland had the largest growth in non-government students

up 21.9%, while the number of students at government schools also increased, up 8.0%276.

Tasmania has traditionally had low participation rates in tertiary and higher education.

However participation in post-secondary education and training has increased steadily in

recent years. In 2000, 13.7% of the population aged 15-64 years had enrolled in a public or higher vocational course. By 2008, participation had risen to 19.0%, although in 2009, it

dropped to 18.4%277.

The 2006 Census of Population and Housing278 found that 40.6% of respondents aged 15

years and over usually resident in Tasmania had completed a non-school qualification

(compared with 45.4% nationally). This was up from 33.9% from the previous Census in

2001, an increase of nearly 20%.

Of respondents at the 2006 census who had completed a non-school qualification:

49.9% had completed a Certificate level (compared with 42.4% nationally);

25.6% had completed a Bachelor Degree level (compared with 29.3% nationally);

16.7% had completed an Advanced Diploma and Diploma level (compared with

18.0% nationally);

4.7% had completed Postgraduate Degree level (compared with 6.6% nationally); and

3.2% had completed a Graduate Diploma and Graduate Certificate level (compared

with 3.6% nationally).

273 Australian Bureau of Statistics 2011, Schools, Australia, 2010: Table 42b (cat. no. 4221.0) 274 Ibid: Table 42a and 42b (cat. no. 4221.0) 275 Ibid 276 Ibid 277 Tasmania Together Indicator 3.4.2: Participation in post-secondary education and training. See

www.ttbenchmarks.com.au 278 Australian Bureau of Statistics, 2006 Census of Population and Housing, Data available on request

57

COST OF HEALTH



health279 prices for the weighted average of eight capital cities increased by 25.8%. This was

above the national inflation rate, which increased by 16.3% over the same period280.





price of health for Hobart increased by 23.8%. This was above the inflation rate for Hobart, which increased by 14.9% over the same period281.

279 Health goods and services priced in the 15th series CPI include pharmaceuticals and health services, such as hospital and

medical services, optical services and dental services. See Australian Bureau of Statistics 2005, A Guide to the Consumer

Price Index, 15th Series; Appendix 2 (cat. no. 6440.0) 280 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Tables 3 and

4 (cat. no. 6401.0) 281 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0)

58


Expenditure

In 2003-04, Tasmanian household average expenditure on medical care and health

expenses282 was $36.11 per week, which represented 4.8% of total weekly household expenditure283. The proportion of weekly expenditure changed minimally from 1998-99,

when medical care and health expenses accounted for 4.9% of average weekly household

expenditure284.


282 Average weekly household expenditure on medical care and health expenses includes accident and health insurance;

health practitioner’s fees; medicines, pharmaceutical products and therapeutic appliances; and other medical care and

health expenses such as hospital and nursing home charges. See Australian Bureau of Statistics 2006, Household

Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Household Expenditure Survey, Australia:

Detailed Expenditure Items Data Cube: Table 5 (cat. no. 6535.0.55.001) 283 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04



and Quintile Detailed Tables Data Cube: Table 5 (cat. no. 6535.0)

59

In 2003-04, Tasmanian household average expenditure on medical care and health

expenses was slightly below the national average of 5.1%. Of all states/territories, the

Australian Capital Territory spent the most, on average, on medical care and health expenses at 5.7%, and the Northern Territory spent the least at 3.8%285.

MEDICAL CARE AND HEALTH EXPENSES, average weekly household expenditure,

2003-04

Almost half (49.7%) of the medical care and health expenditure in Tasmania was on

accident and health insurance, followed by medicines, pharmaceutical products and therapeutic appliances (28.8%), and health practitioner's fees (18.8%)286.

MEDICAL CARE AND HEALTH EXPENSES, average weekly household expenditure,

Tasmania, 2003-04

Health Concessions and Private Health Insurance

For people with low incomes or who meet other criteria, eligibility for a government health

card287 results in a reduction in their out-of-pocket expenses on health; medical care or

hospital treatment as well as medicine free of charge or at reduced rates288.


Australia Data Cube: Table 25 (cat. no. 6530.0) 286 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04


6535.0.55.001) 287 Government health card refers to coverage by the following government-issued cards which entitle the card holder, and

in some cases their dependents, to a variety of health benefits or concessions (e.g. medical care, hospital

treatment/accommodation, supply of pharmaceuticals, free of charge or at reduced rates): any cards from the Department

60

A Pensioner Concession Card (PCC)289 is available to all pensioners to obtain concessions

on prescription medicines and, in conjunction with the Medicare card, basic hospital and

medical treatment.

A Health Care Card (HCC)290 is issued to people meeting eligibility requirements for

various federal government welfare payments. A person may also be eligible for a Low

Income Health Card if they are not receiving a Centrelink benefit. This is assessed through

an independent claim for a Health Care Card, based on the income received by the

claimant (and their partner, if applicable) in the eight weeks prior to claiming the card.

Advantages of holding the card can include reduced health care costs, including prescription

medicines through the Pharmaceutical Benefits Scheme (PBS), dental care and eye care291.

In January 2011, 120 500 people in Tasmania held a PCC (109 000 through Centrelink and

11 500 through the Department of Veterans Affairs) and 52 700 people were covered by a

government health card (44 700 held a Health Care Card issued by Centrelink and 8 000

had a Treatment Card issued by the Department of Veterans Affairs). Of the total

population of Tasmania (503 300 people)292, 23.9% were PCC holders and 10.5% were

HCC holders293.

Local Government Areas (LGAs) with the highest proportion of both PCC and HCC holders were:

LGA PCC Holders (%) HCC Holders (%)

Launceston 12.4 14.8

Glenorchy 10.8 10.2

Clarence 9.6 8.2

Hobart 6.3 7.8

Devonport 5.9 5.5

Kingborough 5.2 4.8

Source: Centrelink unpublished data, January 2011

In 2007-08, half (50.4%) of Tasmanians aged 15 years and over did not have private health

insurance. People aged 15-24 years (60.2%), 25-34 years (58.7%) and 75 years and over

(57.6%) were the least likely to have private health insurance294.

of Veterans' Affairs (DVA); Health Care Card (including the low income health care card); Pensioner Concession Card;

and Commonwealth Seniors Health Card. See Australian Bureau of Statistics 2008, Household Expenditure on Health: A

Snapshot, 2004-05 (cat. no. 4836.0.55.001) 288 Australian Bureau of Statistics 2008, Household Expenditure on Health: A Snapshot, 2004-05 (cat. no. 4836.0.55.001) 289 People eligible for a Pensioner Concession Card include people on a pension, people receiving Parenting Payment

Single, Carer Payment (Adult), Carer Payment (Child), Newstart Allowance or Youth Allowance (other) as a single

principal carer of dependent children. People may also be eligible if they are aged over 60 and have been in receipt of

one or a combination of the following payments continuously for more than nine months: Newstart Allowance, Sickness

Allowance, Partner Allowance, Widow Allowance, Parenting Payment Partnered or Special Benefit; or assessed as having a

partial capacity to work and are receiving Newstart Allowance, Parenting Payment Partnered or Youth Allowance (other).

Advice from Centrelink, January 2011. 290 People receiving the following payments are eligible for a Health Care Card: Newstart Allowance, Exceptional

Circumstances Relief Payment, Special benefit, Sickness Allowance, Partner Allowance, Widow Allowance, Youth

Allowance (only job seekers receive a card automatically. Full-time students need to apply as a low income earner),

Parenting Payment Partnered, maximum Rate of family Tax Benefit Part A, Mobility Allowance (if not in receipt of

Disability Support Pension), or Carer Allowance (for a child under 16 years with a disability). Other people eligible for a

Health Care Card include foster carers, low income earners and former holders of a carer allowance (child) health care

card. Advice from Centrelink, January 2011. 291 Centrelink: Health Care Cards -http://www.centrelink.gov.au/internet/internet.nsf/payments/conc_cards_hcc.htm, viewed

13/05/11 292 Australian Bureau of Statistics 2010, Population by Age and Sex, Regions of Australia, 2009 (cat. no. 3235.0) 293 Centrelink unpublished data, January 2011 294 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results, State Tables, 2007-08 (Reissue);

Tasmania Data Cube: Table 16.3 (cat. no. 4362.0)

http://www.centrelink.gov.au/internet/internet.nsf/payments/conc_cards_hcc.htm

61

PEOPLE WITHOUT PRIVATE HEALTH INSURANCE, Tasmania, 2007-08(a)

Compared to other states/territories, Tasmania had the second highest proportion of

people without private health insurance. Queensland had the highest proportion at 53.5%,

while the Australian Capital Territory had the lowest (38.6%). The national average

proportion of people without private health insurance was 47.0%295.

PEOPLE WITHOUT PRIVATE HEALTH INSURANCE, 2007-08(a)

Of those Tasmanians without private health insurance, 65.1% cited cost ('cannot afford

it/too expensive') as the main reason for not insuring. Compared to other state/territories,

Tasmanians were least able to afford private health insurance296.

295 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results, 2007-08 (Reissue); Data Cubes: Table

18 (cat. no. 4364.0) and Australian Bureau of Statistics 2009, National Health Survey: Summary of Results; State Tables, 2007-

08 (Reissue); State Data Cubes: Table 16.3 (cat. no. 4362.0) 296 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results, 2007-08 (Reissue); Data Cubes: Table

19 (cat. no. 4364.0) and Australian Bureau of Statistics 2009, National Health Survey: Summary of Results; State Tables, 2007-

08 (Reissue); State Data Cubes: Table 17 (cat. no. 4362.0)

62

CANNOT AFFORD PRIVATE HEALTH INSURANCE, 2007-08

Nationally, the incidence of private health insurance cover in 2004-05 decreased as people

reached retirement age, with older age groups more likely to be covered by a government

health card297.

PERSONS WITH PRIVATE HEALTH INSURANCE AND GOVERNMENT HEALTH CARDS, Australia, 2004–05

Medicines, pharmaceutical products and therapeutic appliances

In 2003-04, Tasmanian households spent on average $10.39 per week on medicines,

pharmaceutical products and therapeutic appliances. Over one third of this expenditure

was on prescriptions (35.8%), followed by medicines and pharmaceutical products not elsewhere classified (nec) (32.5%), medicines, pharmaceutical products and therapeutic

appliances not further defined (nfd) (8.2%), non-prescription ointments and lotions (nec)

(7.0%), and non-prescribed pain relievers(6.1%)298.

Compared to other states/territories, the proportion of expenditure on medicines,

pharmaceutical products and therapeutic appliances that Tasmanian households spent on

prescriptions (35.8%) was mid-range, although above the national average of 32.2%. South

Australian households spent the most on prescriptions at 38.8% per week, followed by

297 Australian Bureau of Statistics 2008, Household Expenditure on Health: A Snapshot, 2004-05 (cat. no. 4836.0.55.001) 298 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue); Household Expenditure Survey, Australia: Detailed Expenditure Items: Table 5 (cat. no. 6535.0.55.001)

63

Western Australia (38.7%) and Victoria (36.3%). Households in New South Wales spent

the least at 27.8%299.

Health Practitioner Fees

In 2003-04, Tasmanian households spent on average $6.79 per week on health practitioner fees. Most of this was spent on specialist doctor fees (31.2%), followed by dental fees

(30.6%), GP fees (17.7%), and optician fees (12.1%)300.

Compared to other states/territories, Tasmanian households spent301:

The equal highest proportion on GP fees (together with Northern Territory) – 17.7% compared with 11.0% nationally;

The second highest proportion on specialist doctor fees (after New South Wales) - 31.2% compared with 29.5% nationally;

The second highest proportion on optician fees (after South Australia) – 12.1%

compared with 8.2% nationally; and

The lowest proportion on dental fees – 30.6% compared with 40.0% nationally.

Who spends more on medical care and health expenses?

Despite different incomes, Australian households spend on average the same proportion

(approximately 5%) of their disposable income on medical care and health expenses. This

may be due, in part, to government assistance to eligible low income earners and other pension recipients in the form of government health care cards, which help subsidise

medical costs302.

In 2003-04 in Tasmania, some household types spent disproportionally more than the state average of 4.8% on medical care and health expenses303:

Households with a reference person aged 65 years and over (7.8%);

Home owners without a mortgage (6.7%);

Households with their own unincorporated business (6.5%);

Couple only households (5.5%); and

Middle income earners (5.4%).

This suggests that older people, who are more likely to own their own home and live in a

couple only household, are the group most likely to be spending more on health, and when analysing expenditure on medical care and health expenses, older age groups were found to

have spent more (proportionally) than younger age groups. Households with a reference

person aged 65 years and over spent the most at 7.8% of their average weekly household

expenditure, followed by people aged 55-64 years (5.9%), and people aged 45-54 years

(5.4%). Households with a reference person aged 15-24 years spent the least at 1.6%*304.


(Reissue); Household Expenditure Survey, Australia: Detailed Expenditure Items: Table 5 (cat. no. 6535.0.55.001) 300 Ibid 301 Ibid 302 Australian Bureau of Statistics 2008, Household Expenditure on Health: A Snapshot, 2004-05 (cat. no. 4836.0.55.001) 303 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Tasmania Data Cube: Tables 5, 9, 13 and 15 (cat. no. 6530.0) 304 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue),

Tasmania Data Cube: Table 19 (cat. no. 6530.0) Note: * This estimate has a relative standard error of between 25% and

50% and should be used with caution.

64

COST OF FOOD


Over the five year period from the March quarter 2006 to the March quarter 2011, food305

prices for the weighted average of eight capital cities increased by 22.8%. This was the fifth

biggest price increase, after alcohol and tobacco (+30.2%), housing (+28.4%), education (+27.7%) and health (+25.8%). Food prices rose at a greater rate than the national inflation

rate, which increased by 16.3% over the same period306.


The Consumer Price Index (CPI) estimates price changes for households as a whole, but it

does not capture the wide variation in households with different expenditure patterns.

Hence, the Analytical Living Cost Indexes for Selected Australian Household Types (ALCIs)

were developed. These take into account some notable differences in the expenditure

weights across different household types. For example, the proportion of expenditure

allocated to food is highest for age pensioner households. It is also relatively high for other

government transfer recipient households307.

While the ALCIs do not provide state level data, national trends through the year to the

December quarter 2010 indicate that:

The index for other government transfer recipient households rose 4.5% for the year to the December quarter 2010 mainly due to increases in vegetables amongst other

components (tobacco, mortgage interest charges, rents, and electricity). This was a larger increase than the CPI which rose 2.6%;

The index for age pensioner households rose 3.1% for the year to the December quarter 2010 mainly due to increases in vegetables amongst other components

305 Food goods and services priced in the 15th series CPI include dairy and related products; bread and cereal products;

meat and seafoods; fruit and vegetables; non-alcoholic drinks and snack foods; meals out and take away foods; and other

foods (such as eggs, jams, honey and sandwich spreads, tea, coffee and food drinks, food additives and condiments, fats

and oils, and foods not elsewhere classified including canned and packet soups, baby foods, and prepared meals fresh and

frozen requiring cooking/heating). See Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th Series;

Appendix 2 (cat. no. 6440.0) 306 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Tables 3 and

4 (cat. no. 6401.0) 307 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Dec 2010;

Explanatory Notes (cat. no. 6463.0)

65

(tobacco, electricity, hospital and medical services, and insurance). This was a larger

increase than the CPI increase of 2.6% for the year to December quarter 2010.

Compared to the wider CPI population group, age pensioner households have a relatively higher proportion of expenditure on fruit and vegetables, which increased

for the year to the December quarter 2010308.



price of food for Hobart increased by 22.3%. This was higher than the inflation rate for Hobart, which increased by 14.9% over the same period, but lower than the price increase

experienced by some other groups309.


Food subgroups which experienced the highest increase over this five year period were fruit

and vegetables (+39.6%), meals out and take away foods (+23.8%), and bread and cereal

products (+22.4%)310.

308 Australian Bureau of Statistics 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Dec 2010 (cat.

no. 6463.0) 309 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0) 310 Ibid

66

FOOD SUBGROUPS, Consumer Price Index, Hobart, March quarter 2006 to March

quarter 2011

Food expenditure classes311 which experienced the highest increases over this five year period were fruit (+61.5%), other cereal products, such as flour, rice, pasta and similar grain

products including bran (+28.7%), soft drinks, waters and juices (27.4%), vegetables

(+26.7%), and fish and other seafood (+26.0%). This indicates that the cost of basic food items such as fruit and vegetables have increased at a greater rate than many other food

types. The price of bread increased 24.4% over this five year period, and the price of milk

by 10.3%312.

FOOD EXPENDITURE CLASSES, Consumer Price Index, Hobart, March quarter 2006 to

March quarter 2011

311 Examples of item coverage are provided in Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index,

15th Series; Appendix 2 (cat. no. 6440.0) 312 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0)

67

Comparison of average retail prices313

While the CPI allows comparison of prices over time (but not between jurisdictions), the

Australian Bureau of Statistics publishes Average Retail Prices of Selected items, Eight

Capital Cities (cat. no. 6403.0.55.001) for the purpose of making price comparisons between the capital cities for individual items (but these cannot be compared over time)314.

In the March quarter 2011, Hobart was the most expensive capital city for breakfast cereal,

white sugar and teabags, and the least expensive for sliced cheese, bread, rice, eggs, jam and

baked beans315.

In the March quarter 2011:

A 750g box of wheat-based breakfast cereal cost 412 cents in Hobart compared to 399 cents in Adelaide and 385 cents in Sydney. Darwin had the cheapest breakfast

cereal at 359 cents per 750g box;

2kg white sugar cost 415 cents in Hobart compared to 335 cents in Perth and 324

cents in Darwin. Canberra had the cheapest white sugar at 243 cents per 2 kg;

A 180g packet of teabags cost 436 cents in Hobart compared to 434 cents in Brisbane and 432 cents in Melbourne. Sydney had the cheapest teabags at 417 cents

per 180g packet.

Other food items that were relatively expensive (ranked second or third most expensive) compared to other states/territories were milk, self-raising flour, roast beef, beef sausages,

bananas, carrots316, chuck steak, oranges, tomatoes, canned pineapple, frozen peas and

instant coffee317.

Expenditure

In 2003-04, average weekly household expenditure on food and non-alcoholic beverages318

in Tasmania was $135 per week, representing 17.8% of total household expenditure.

313 Australian Bureau of Statistics 2011, Average Retail Prices of Selected Items, Eight Capital Cities, Dec 2010, (cat. no.

6403.0.55.001) 314 The average prices for some items may not be completely comparable from city to city, nor from quarter to quarter

(see the explanatory notes for more information). It is not appropriate to add together these items as no supporting

information is provided on the relative importance of the items in the spending patterns of the households in each city. It is

also not appropriate to compare item prices over time as the specifications and quality of items actually priced vary from

period to period. Comparisons over time of prices for the range of products consumed by households are provided by

the CPI. See Australian Bureau of Statistics 2011, Average Retail Prices of Selected Items, Eight Capital Cities, Dec 2010 (cat.

no. 6403.0.55.001 )

The average retail prices of selected items included in the Consumer Price Index for the eight capital cities should be

regarded as no more than approximate indicators of price levels for the items concerned as the selected grades, brands,

package size, etc. for some items differ between cities and may also differ from one period to the next due to changes in

product specifications. For example, potatoes may be priced as washed or brushed, loose or bagged, depending on what is

most representative for a particular city. 315 Australian Bureau of Statistics 2011, Average Retail Prices of Selected Items, Eight Capital Cities, Dec 2010, (cat. no.

6403.0.55.001) 316 Hobart ranked as the second most expensive capital city for these six items. 317 Hobart ranked as the third most expensive capital city for these six items. 318 Average weekly household expenditure on food and non-alcoholic beverages includes bakery products, flours and

cereals; meat; fish and seafood; eggs and egg products; dairy products; edible oils and fats; fruit and nuts; vegetables;

condiments, confectionary, food additives and prepared meals; non-alcoholic beverages; meals out and fast foods; and

other foods and non-alcoholic beverages not elsewhere classified. For further details on HES groups, see Australian

Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue); Table 5

(cat. no. 6535.0.55.001)

68

Tasmanian households spent proportionally more per week on food than any other goods

or services319.



weekly expenditure on food. This was higher than the national average of 17.1%320.

FOOD AND NON-ALCOHOLIC BEVERAGES, average weekly household expenditure,

All households, 2003-04

Who spends more on food?

Increases in the basic cost of living can have a major impact on living standards for different

groups. Low income households tend to spend a greater percentage of their income on food, so when food prices rise relative to other goods and services, these households face

greater increases in their living costs321. While the average weekly expenditure on food for

all households equated to 17.8% of total expenditure in 2003-04, some household types

spent disproportionally more:



6535.0.55.001) 320 Ibid 321 Department of Treasury and Finance 2010, State Tax Review Discussion Paper, Dec 2010, p.11

69

Households renting from state housing authority spent 23.0% of their total weekly

expenditure on food;

One parent families with dependent children spent 20.2%;

Households in which the reference person was aged 65 years and over spent 20.2%;

Households dependent on government pensions and allowances as their principal

source of income spent 20.1%;

Low-income households322 spent 19.9%;

Home owners without a mortgage spent19.1%; and

Couple families with dependent children spent 18.8%323.

FOOD AND NON-ALCOHOLIC BEVERAGES, average weekly household expenditure, selected Tasmanian households, 2003-04

While expenditure on food tends to increase as household income increases, the

proportion of income spent on food generally decreases.

In 2003-04, almost a quarter (24.4%) of food expenditure in Tasmania went on meals out

and fast foods, followed by meat (13.9%) and condiments, confectionery, food additives and

prepared meals (12.6%) which included such foods as potato crisps, ice cream, chocolate,

frozen and packaged prepared meals, canned spaghetti and baked beans, canned and bottled baby foods, dips, sauces and spreads. Expenditure on vegetables was 7.7%, and fruit

and nuts 5.5%324.

322 Households falling in the second and third equivalised disposable household income decile. See Australian Bureau of

Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, Tasmania, 2003-04 (Reissue): Table 5 (cat. no.

6530.0) 323 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue) (cat.

no. 6530.0) 324 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue) (cat. no. 6535.0.55.001)

70

FOOD AND NON-ALCOHOLIC BEVERAGES, Average weekly household expenditure,

Tasmania, 2003-04

COST OF ALCOHOL AND TOBACCO



price of alcohol and tobacco325 for the weighted average of eight capital cities increased by

30.2%. This was the highest price increase of all groups, and was above the national inflation rate, which increased by 16.3% over the same period326.

325

Alcohol and tobacco goods and services priced in the 15th series CPI include alcoholic drinks (such as beer, wine and spirits) and

tobacco products. See Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th Series; Appendix 2 (cat. no. 6440.0) 326

Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Tables 3 and 4 (cat. no.

6401.0)

71





price of alcohol and tobacco for Hobart increased by 28.1%. This was the highest price increase of all groups, and was above the inflation rate for Hobart, which increased by

14.9% over the same period. Increases in the alcohol and tobacco group have mostly been

driven by increases in tobacco, mainly due to the effect of the 25% increase in federal excise on tobacco implemented on 30 April 2010327.



no. 6401.0)

72

Within the alcohol and tobacco group for Hobart, the greatest movement occurred in the

price of tobacco products:

Through the year from the March quarter 2010 to the March quarter 2011, the price of tobacco products rose by 25.5%;

Over the five year period from the March quarter 2006 to the March quarter 2011, the price of tobacco products rose by 48.9%;

Over the 10 year period from the March quarter 2001 to the March quarter 2011, the price of tobacco products rose by 82.9%; and

Over the 20 year period, from the March quarter 1991 to the March quarter 2011, the price of tobacco products rose by 406.0%328.

Prices for the alcoholic drinks subgroup for Hobart increased 19.0% over the five year

period from the March quarter 2006 to the March quarter 2011. Within that, the price of

spirits rose 37.3% over this time, beer prices increased by 22.3%, and wine prices increased

by 6.7%329.

Expenditure on tobacco products

In 2003-04, Tasmanian households spent on average $14.74 per week on tobacco

products330. This represented 1.9% of total household expenditure.

AVERAGE WEEKLY HOUSEHOLD EXPENDITURE, all households, Tasmania, 2003-04


their total weekly expenditure on tobacco products. Nationally, the average was $11.55 or

1.3% of total household expenditure per week331.


no. 6401.0) 329 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat.

no. 6401.0) 330 Average weekly household expenditure on tobacco products includes cigarettes and other tobacco products. For

further details on HES groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed

Expenditure Items, 2003-04 (Reissue); Table 5 (cat. no. 6535.0.55.001)

73

TOBACCO PRODUCTS, average weekly household expenditure, 2003-04

In Tasmania, average weekly household expenditure on tobacco products rose from 1.7% in

1998-99332 to 1.9% in 2003-04333.

Who spends more on tobacco products?

Different household types tend to have different spending patterns. In Tasmania, those

household types spending above the weekly average of all households (1.9%) on tobacco products in 2003-04 included334:

Households renting from the state housing authority (8.4%);

Households dependent on government pensions and allowances as their principal

source of income (2.6%); and

Low-income households335 (2.6%).

Households where the reference person was aged 15-24 years had the highest proportion

(2.4%*) of spending on tobacco products of all age groups336, while the prevalence of smoking declined with rising household income levels, from 32.1% in the lowest income

quintile to 15.6% in the highest income quintile337.

Tasmania has the highest proportion of current daily smokers338 of all states/territories. In 2007-08, almost one-quarter (23.3%) of the Tasmanian population aged 18 years and over

were current daily smokers, compared with 19.0% nationally. The proportion of adult

smokers in Australia has declined over time, with the reduction primarily in the older age



6535.0.55.001) 332 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Detailed Expenditure Items, 1998-99;

Household Expenditure Survey, Australia: Detailed Expenditure Items: Table 5 (cat. no. 6535.0) 333 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue); Household Expenditure Survey, Australia: Detailed Expenditure Items: Table 5 (cat. no. 6535.0.55.001) 334 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue);

Tasmania Data Cube: Tables 5, 9 and 13 (cat. no. 6530.0) 335 The Australian Bureau of Statistics defines low-income households as those falling in the second and third deciles of the

income distribution (that is, the 20% of people in the second and third lowest income deciles) – See Australian Bureau of

Statistics 2009, Household Income and Income Distribution, Australia, 2007-08; Explanatory Notes (cat. no. 6523.0) 336 * Note this figure has a relative standard error of 25% to 50% and should be used with caution. Australian Bureau of

Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue); Tasmania Data Cube: Table

19 (cat. no. 6530.0) 337 Department of Health and Human Services (DHHS) 2008, State of Public Health Report 2008, p.20 338 A current daily smoker is an adult who reported that they regularly smoked one or more cigarettes, cigars or pipes per

day. See Australian Bureau of Statistics 2009, National Health Survey: Summary of Results, 2007-08 (Reissue); Glossary (cat.

no. 4364.0)

74

groups339. However, in Tasmania, the proportion of current daily smokers grew from 21.4%

in 2001340 to 24.1% in 2004-05341, with only a slight decrease in 2007-08 to 23.3%342.

CURRENT DAILY SMOKERS

Smoking rates are highest in younger age groups and decline with increasing age. In 2007-08, current smokers343 accounted for344:

37.3% of people aged 18-24 years;




19.5% of people aged 55-64 years; and

8.4% of people aged 65 years and over.

339 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results, 2007-08 (Reissue); Table 11: 1.3 (cat.

no. 4364.0) 340 Australian Bureau of Statistics 2002, National Health Survey: Summary of Results, 2001: Table 1 (cat. no. 4364.0) 341 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results; State Tables, 2004-05 (cat. no. 4362.0) 342 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results; State Tables, 2007-08 (Reissue) (cat. no.

4362.0) 343 Current smokers include current daily smokers and other current smokers. See Australian Bureau of Statistics 2009,

National Health Survey: Summary of Results, 2007-08 (Reissue); Glossary (cat. no. 4364.0). Data for current smokers is also

presented in Tasmania Together Indicator 4.3.3: Proportion of Tasmanians aged 18 and over who are current smokers.

See www.ttbenchmarks.com.au 344 Australian Bureau of Statistics 2009, National Health Survey: Summary of Results; State Tables, 2007-08 (Reissue);

Tasmania Data Cube, Table 11.3 (cat. no. 4362.0)

75

CURRENT SMOKERS, by Age, Tasmania, 2007-08

Expenditure on alcohol

In 2003-04, Tasmanian households spent on average $26.79 per week on alcohol345. This

represented 3.5% of total weekly household expenditure, and was higher than the national

average of 2.6%. Compared to other states/territories, only the Northern Territory spent more per week on alcohol (3.6%) than Tasmanian households 346.

ALCOHOLIC BEVERAGES, average weekly household expenditure, 2003-04

In Tasmania, average weekly household expenditure on alcoholic beverages rose from 2.6%

in 1998-99347 to 3.5% in 2003-04348.

345 Average weekly household expenditure on alcoholic beverages includes beer, wine, spirits and other alcoholic

beverages for consumption on licensed premises and off licensed premises. For further details on household expenditure

groups, see Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-

04 (Reissue); Table 5 (cat. no. 6535.0.55.001) 346 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue);

Australia Data Cube: Table 25 (cat. no. 6530.0) 347 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Detailed Expenditure Items, 1998-99, Table

5 (cat. no. 6535.0) 348 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04


6535.0.55.001)

76

Who spends more on alcohol?

Some household types spent disproportionally more than the state average of 3.5% on

alcoholic beverages. These included349:

Households with their own unincorporated business (5.3%*350);


Middle income earners (4.4%);

Home owners without a mortgage (3.9%);

Wage and salary earners (3.8%); and

Lone person households (3.7%).

Households where the reference person was aged 45-54 years had the highest proportion

(4.4%) of spending on alcoholic beverages of all age groups351.

Most of the expenditure on alcoholic beverages was on beer (46.5%), followed by wine (22.3%), and alcoholic beverages not further defined (nfd) (16.9%). Expenditure on spirits

was 13.2%352.

The proportion of Tasmanian adults at risk of long-term alcohol-related harm has continued to increase and is slightly above the national rate. In 2001, the proportion of the population

aged 18 years and over at risk of long-term alcohol related harm was 9.8%. In 2007-08, this

had risen to 13.4%, compared with the national average of 13.2%353.

In 2007, the proportion of 14-24 year olds at risk of short term alcohol related harm was

42.3%, down from 43.3% in 2004354.

RECREATION


Over the five year period from the March quarter 2006 to the March quarter 2011, the price of recreation355 for the weighted average of eight capital cities increased by 2.6%. This

was below the national inflation rate, which increased by 16.3% over the same period356.


Tasmania Data Cube: Tables 5, 9 and 13 (cat. no. 6530.0) 350 * Note this figure has a relative standard error of 25% to 50% and should be used with caution. 351 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results, 2003-04 (Reissue);

Tasmania Data Cube: Table 19 (cat. no. 6530.0) 352 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04


6535.0.55.001) 353 Department of Health and Human Services (DHHS), 2010, DHHS Annual Report 2009-10, p.18 354 Tasmania Together Indicator 2.2.3: Proportion of 14-24 year olds at risk of short term alcohol related harm. See

www.ttbenchmarks.com.au 355 Recreation goods and services priced in the 15th series CPI include audio, visual and computing equipment and services;

books, newspapers and magazines; sports and other recreation (such as equipment, participation, toys, games and hobbies,

and pets). See Australian Bureau of Statistics 2005, A Guide to the Consumer Price Index, 15th Series; Appendix 2 (cat. no.

6440.0) 356 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Tables 3 and

4 (cat. no. 6401.0)

77



State Context


price of recreation for Hobart increased by only 0.2%. This was below the inflation rate for Hobart, which increased by 14.9% over the same period357.


Expenditure

In 2003-04, Tasmanian households spent $95 or 12.5% of their average weekly expenditure

on recreation358.

357

Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011, Time Series Spreadsheets: Table 13 (cat. no. 6401.0) 358 Average weekly household expenditure on recreation goods and services includes recreational and educational

equipment (such as audio, visual and computing, books, newspapers and magazines); recreational and educational services

78

AVERAGE WEEKLY HOUSEHOLD EXPENDITURE, all households, Tasmania, 2003-04

Tasmanian households spent a similar proportion of weekly expenditure on recreation to

the national average of 12.8%359.

RECREATION, Average weekly household expenditure, 2003-04

In Tasmania, most recreation expenditure was spent on recreational and educational

equipment360 ($40 per week or 5.2% of average weekly household expenditure), $26 per

week (or 3.5%) was spent on holidays, $21 per week (or 2.8%) or was spent on

recreational and educational services (except holidays)361, and $8 per week (or 1.0%) was

spent on animal expenses362.

(such as gambling, sports fees, and cultural fees and charges); holidays; and animal expenses. See Australian Bureau of

Statistics 2006, Household Expenditure Survey, Australia: Summary of Results 2003-04 (Reissue), Australia Data Tables Data

Cube: Table 25 (cat. no. 6530.0) 359 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Summary of Results 2003-04 (Reissue),

Australia Data Tables Data Cube: Table 25 (cat. no. 6530.0) 360 Recreational and educational equipment includes audio visual equipment, home computer equipment, blank and pre-

recorded media, books, newspapers and magazines, and other recreational equipment. See Australian Bureau of Statistics

2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue), Detailed Expenditure Data

Cube: Table 5 (cat. no. 6535.0.55.001) 361 Recreational and educational services include gambling, hire and repair of recreational and educational equipment, sport

fees and charges, cultural fees and charges, and “other” which includes Pay TV fees and internet charges. Ibid 362 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue), Detailed Expenditure Data Cube: Table 5 (cat. no. 6535.0.55.001)

79

Who spends more on recreation?

Some household types spent disproportionally more than the state average of 12.5% on

recreation, including363:


Middle income earners (14.1%);

Couple only households (14.1%);

Wage and salary earners (13.0%);

Home owners without a mortgage (12.9%); and

Households with a reference person aged 65 years and over (12.8%).

Holidays

In 2003-04, Tasmanian average weekly household expenditure on holidays was down from

4.8% in 1998-99 to 3.5%364.

Approximately two-thirds (64.3%) of holiday expenditure went on holidays within Australia, down from 76.5% in 1998-99. Meanwhile, expenditure on overseas holidays went up from

23.5% in 1998-99 to 35.7% in 2003-04365.

In 2003-04, most holiday expenditure was spent on holiday hotel/motel charges – Australia (21.3%), followed by 21.0% on holiday air fares – overseas, and 20.8% on holiday air fares -

Australia366.

Recreational and Educational Services

Of the weekly household expenditure on recreational and educational services, most was spent on “other” (34.7%) which included internet charges, Pay TV fees, culture and

recreation lessons (excluding sports lessons) and day trips and other excursions. This was

followed by gambling (24.4%) and sports fees and charges (19.8%)367.


Tasmania Data Cube: Tables 5, 9 and 13 (cat. no. 6530.0) 364 Australian Bureau of Statistics 2000, Household Expenditure Survey, Australia: Summary of Results, 1998-99, Australia


Survey, Australia: Detailed Expenditure Items, 2003-04 (Reissue), Detailed Expenditure Data Cube: Table 5 (cat. no.

6535.0.55.001) 365 Ibid 366 Australian Bureau of Statistics 2006, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003-04

(Reissue), Detailed Expenditure Data Cube: Table 5 (cat. no. 6535.0.55.001) 367 Ibid

80

RECREATIONAL AND EDUCATIONAL SERVICES (excluding holiday expenses), average

weekly household expenditure, Tasmania, 2003-04

Gambling

The Australian Bureau of Statistics reports on gambling as entertainment expenditure368. It

encompasses casinos, electronic gaming machines (EGMs), sports betting, lotteries and racing. Tasmania was the first state to have a casino and the last state to allow for the

introduction of EGMs into hotels and clubs, noting that Western Australia does not allow

EGMs into hotels and clubs369.

In 2005-06, Tasmania had a relatively lower level of total gambling expenditure compared

to the nation as a whole. Tasmanian’s spent an average of $774 per adult on gambling

compared to a national average of $1 122 per adult. Only Western Australia had a lower

average spend on gambling ($551 per adult) due to EGMs only being permitted in the

Burswood Casino. The Northern Territory had the highest370 at $2 162, followed by New

South Wales ($1 365) and Victoria ($1 165)371.

Tasmania’s relatively lower gambling expenditure per adult may in part be due to lower

average incomes, and also to the introduction of smoking bans. Tasmania was the first state

to introduce smoking bans which had the effect of reducing patronage and consequently

expenditure on gaming machines. Limited smoking bans in casino, hotel and club gaming areas were introduced from 1 January 2005, while a complete prohibition on smoking in

licensed premises came into effect from 1 January 2006372.

Compared to other states/territories, Tasmania has a relatively high participation in casino

gambling. This was mostly due to the high proportion of EGMs located in the two casinos

368 The South Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into

Gambling in Tasmania: Volume 1, p.22 369 The South Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into

Gambling in Tasmania: Volume 1, p.22 370 Gambling expenditure in the Northern Territory (per capita, relative, total) is inflated by spending by overseas and

interstate participants with the numerous internet and online operators licensed in the Territory. See The South

Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into Gambling in

Tasmania: Volume 1, Table 4.3, p.40 371 The South Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into

Gambling in Tasmania: Volume 1, Table 4.3, p.40 372 Ibid, p.39

81

(in 2006, 35% of Tasmania’s EGMs were located in casinos). In 2005-06, Tasmania’s

average per capita casino expenditure was $270, well above the national average of $187.

Only the Northern Territory had higher relative casino expenditure at $678 per capita373.

In 2005-06, Tasmania had a lower prevalence of EGMs in clubs and hotels than other

states/territories. Tasmania had an average of 6.4 machines per 1 000 adults, compared

with 18.9 machines per 1 000 adults in New South Wales and 13.5 in Queensland. Hence,

per capita expenditure on EGMs in clubs and hotels was lower relative to other

states/territories. Tasmania had the lowest per capita expenditure on EGMs in clubs and

hotels at $295 per adult, while New South Wales had the highest at $964 per adult374.

Real expenditure on lottery products375 in Tasmania has generally grown steadily over the past 25 years, although slowed dramatically following the introduction of EGMs into clubs

and hotels in the late 1990’s. Tasmania has a relatively high average expenditure on

lotteries. In 2005-06, Tasmanian’s spent an average of $134 per person on lottery

products, which was 11% higher than the national average of $121 per person. This was

mostly due to the much higher expenditure on keno ($55 per person compared to $13.5

nationally). Spending on all other forms of lottery products was lower in Tasmania376.

In 2005-06, sports betting attracted $0.8 million in expenditure, with an average loss of $2.10 per adult, compared with $10.70 per adult nationally377.

Tasmania had an average racing expenditure of $75 per adult in 2005-06, well below the

national average of $138 per adult and lower than any other state/territory378.

IT Access

There has been relatively strong growth in the volume of communication services

consumed by Australians over recent decades. From a low base in 1985–86, per capita real

household final consumption expenditure on these services more than quadrupled by 2005–06 (an increase of 341% or 7.7% each year on average). Much of this growth is

related to the emergence and popularity of new technologies for communicating with

others. In particular, household use of mobile phone and internet services has surged over

the past decade379.

In February 1996, only 24% of all Australian households owned or paid for a mobile phone,

and few (4%) had access to the internet. This profile changed considerably over the

ensuing decade. Averaged across 2002, the proportion of households who had access to a mobile phone jumped to 72% and, averaged across the 2005–06 financial year, the

proportion with access to the internet at home rose to 60%. Relatively low average annual

rates of price inflation during the period for telecommunication services (0.9%) may have contributed to the comparatively strong growth observed in per capita consumption of

communication services 380.

373 The South Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into

Gambling in Tasmania: Volume 1, pp.60-61 374 Ibid, pp.66-71 375 This includes Lotto, Instant Lotto, Soccer Pools, and Keno. See The South Australian Centre for Economic Studies Final

Report: June 2008; Social and Economic Impact Study into Gambling in Tasmania: Volume 1, Table 4.19, p.57 376 The South Australian Centre for Economic Studies Final Report: June 2008; Social and Economic Impact Study into

Gambling in Tasmania: Volume 1, Table 4.19, p.57 377 Ibid, p.vi 378 Ibid 1, p.50 379 Australian Bureau of Statistics 2007, Australian Social Trends, 2007; Feature Article: Trends in Household Consumption (cat.

no. 4102.0) 380 Ibid

82

Proportion of all Australian households with selected communication and recreational

technologies

Selected technology Feb 1994

%

Feb 1996

%

2000

%

2002

%

2005–06

%

Mobile phone n.a. 24.1 61.0 72.0 n.a.

Access to a home computer 29.4 36.0 53.0 61.0 70.0

Home internet access(a) n.a. 3.9 32.0 46.0 60.0

Dedicated games machine(b) 17.8 15.9 32.0 32.0 n.a.

DVD player(c) n.a. n.a. 6.0 23.0 n.a.

Pay TV n.a. 3.0 17.0 21.0 n.a.

(a) Access at any location in February 1996.

(b) Proportion using a dedicated games machine in February 1994 and February 1996.

(c) Excludes DVD drives in computers.

Sources: ABS Australian Social Trends, 1999 (cat. no. 4102.0); ABS Household Use of Information

Technology, Australia, February 1996 (cat. no. 8128.0), 2001–02and 2005–06 editions (cat. no. 8146.0).

In Tasmania, the number of households with access to a home computer has more than

doubled since 1998, increasing from 66 000 (36%) in 1998 to 141 000 (71%) in 2008-09.

At the same time, the number of households with internet access has grown rapidly, increasing from 19 000 (10%) in 1998 to 126 000 (63%) in 2008-09, although this was still

below the national take up by 72% of households381.

HOUSEHOLDS WITH INFORMATION TECHNOLOGY ACCESS, Tasmania, 2008-09

Households are less likely to be connected to a computer, the internet and/or broadband if

they have no children under 15 years; are located in outside the metropolitan area; or have lower household incomes382.

In April 2009, an estimated 26 000 children aged 5-14 years in Tasmania had access to their

own mobile phone. This was the highest proportion (41%) of all states/territories, followed by Western Australia (33%), Queensland and South Australia (31%), New South Wales and

Victoria (30%), Australian Capital Territory (29%) and Northern Territory (27%)383.

381 Australian Bureau of Statistics 2010, Tasmanian Statistical News, Mar 2010; Feature Article: How connected are we? (cat.

no. 1301.6.55.001) Data is also presented in Tasmania Together Indicator 5.4.2: Percentage of households with Internet

connections. See www.ttbenchmarks.com.au 382 Australian Bureau of Statistics 2010, Tasmanian Statistical News, Mar 2010; Feature Article: How connected are we? (cat.

no. 1301.6.55.001) 383 Ibid

83

ABS publications provide information on household use of information technology, but not

about specific costs associated with it. However, there is a clear trend that shows that IT

use is on the rise. As a result, the cost of being a connected society is also rising, as people attempt to keep pace with improving technology and maintain their standard of living.

Sport

In 2009, the proportion of children aged 5-14 years participating in at least one organised

sport outside of school hours was 57.5%. This was lower than the national average of

63.1%, and was the lowest participation rate of all states/territories. Participation was down from 60.8% in 2003384.

Outdoor soccer attracted the highest participation in Tasmania at 19.1%, followed by

swimming (14.6%), Australian Rules football (10.0%), netball (indoor and outdoor) (8.6%) and basketball (8.2%). Nationally the top five participation sports were swimming (18.5%),

outdoor soccer (13.2%), Australian Rules football (8.6%), netball (indoor and outdoor)

(8.4%) and tennis (7.9%)385.

Nationally, children born in countries where the main language spoken is not English were

less likely to participate in selected sport or cultural activities (46.3%) than Australian born

children (25.2%) or children born in other main English-speaking countries (United

Kingdom, Ireland, South Africa, Canada, United States of America and New Zealand) (24.4%)386.

Nationally, children in one-parent families were less likely to participate in these activities

(37.2%) than children in couple families (23.2%). Children in a one-parent family where the parent was not employed were even less likely to participate (50.8%) compared to families

where the parent was employed (27.8%). Children in couple families were less likely to

participate if neither parent was employed (51.1%) than if only one parent was employed (31.4%) or both parents were employed (16.4%)387.

Income data National Context

Australia has experienced substantial income growth in recent years. Nationally, the

average equivalised disposable household income in 2007-08 was $811 per week, 16%

higher than in 2005-06 ($699). It should be noted that part of this increase reflects

improvements to the way income was measured from 2003-04 onwards388. Adjusting for

this break in series the net increase was 13% between 2005-06 and 2007-08 and 50%

between 1994-95 and 2007-08389.

384 Australian Bureau of Statistics 2009, Children's Participation in Cultural and Leisure Activities, Australia, Apr 2009: Table 22

(cat. no. 4901.0). Data is also presented in Tasmania Together Indicator 4.1.3: proportion of children (5-14) participating in

organised sport. See www.ttbenchmarks.com.au 385 Ibid, Table 22 386 Ibid, Table 16 387 Ibid 388 Estimates presented for 2007–08 are not directly comparable with estimates for previous cycles due to improvements

made to measuring income introduced in the 2007–08 cycle. Estimates for 2003–04 and 2005–06 have been recompiled

to reflect the new measures of income, however not all components introduced are available to present the years on a

comparable basis. For further information see Australian Bureau of Statistics 2009, Household Income and Income

Distribution, Australia, 2007-08: Appendix 4 (cat. no.6523) 389 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia, 2007-08: Summary of Findings

(cat. no.6523)

84

Between 2005-06 and 2007-08, the average equivalised disposable household income for

low-income390 households increased by 12% (or 10% when adjusted for the break in series),

14% for middle-income households (or 11% when adjusted for the break in series), and 20% for high-income households (or 16% when adjusted for the break in series)391.

The number of employed people in a household had considerable influence over

household income. High income households contained more employed people on average

(1.9 people per household) than middle (1.6) or low income households (0.7)392.

Income is not the only economic resource that relates to household economic wellbeing.

Wealth is another important resource. Wealth can help build capacity to offset the cost of

living, by allowing households to393:

Reduce living costs - home owners without a mortgage will have substantially

reduced housing costs compared to home owners with a mortgage or renters;

Take dissaving actions394 - by spending their savings, borrowing against assets or selling

assets;

Generate income - through interest on savings or rental income from investment property.

While some households may have low levels of income, they may also have access to relatively high levels of wealth. For example, households with retired members may own

their home outright and/or have other investments. A measure of total wealth or net

worth can be expressed as the sum of all assets less the sum of all debts. Asset components include housing, motor vehicles, shares, superannuation, bank accounts and

businesses owned. Debt components include home loans, other loans, HECS debt, unpaid

credit card debt and unpaid bills395.

Households with different characteristics tend to have different income levels. Nationally,

wages and salaries were the principal source of income for households with middle and high

income levels in 2007–08, while government pensions and allowances were the principal

source of income for low-income households. People living in households where the reference person was aged 65 years and over had the lowest mean incomes per week at

$561 (compared to $811 for all households)396. However, low-income households had the

highest proportion of full ownership of their home (45.8%), reflecting the high proportion of older people in the low-income category397.

390 Households falling in the second and third equivalised disposable household income deciles. See Australian Bureau of

Statistics 2009, Household Income and Income Distribution, Australia, 2007-08, Explanatory Notes (cat. no. 6523.0). 391 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia, 2007-08: Summary of Findings

(cat. no.6523) 392 Ibid 393 Australian Bureau of Statistics 2010, Measures of Australia’s Progress, Sep 2010: Household Economic Wellbeing (cat.

no.1370.0) 394 Types of dissaving actions can include: reducing home loan repayments; drawing on accumulated savings or term

deposits; increasing the balance owing on credit cards by $1 000 or more; entering into a loan agreement with family or

friends; taking out a personal loan; selling household goods or jewellery; selling shares, stocks or bonds; or selling other

assets. See Australian Bureau of Statistics 2007, General Social Survey, Australia, 2006 (cat. no. 4159.0)

395 Scutella, R., Wilkins, R. and Kostenko, W., Melbourne Institute Working Paper Series Working Paper No. 26/09; Estimates of

Poverty and Social Exclusion in Australia: A Multidimensional Approach, Dec 2009, Melbourne Institute of Applied Economic

and Social Research, The University of Melbourne and Brotherhood of St Laurence, p.15 396 Australian Bureau of Statistics 2009, Household Income and Income Distribution; SIH 2007-08 Data Cube: Table 13 (cat.

no.6523.0) 397 Ibid

85

Over the five year period, from the February quarter 2006 to the February quarter 2011,

Australian average weekly earnings grew 26.2%, from $1 021.00 to $1 288.10398. This

meant that wages grew faster than the national inflation rate, which rose 16.3% from the March quarter 2006 to the March quarter 2011399. The average annual increase in wages

was 4.8% over this time, compared with a 3.1% average annual increase in the Consumer

Price Index (CPI) for the weighted average of eight capital cities. However, in real terms,

average equivalised disposable household income did not show any significant change

between 2007–08 ($859) and 2009–10 ($848)400.

CHANGES IN REAL EQUIVALISED DISPOSABLE HOUSEHOLD INCOME PER WEEK,

1995-2010

Inflation refers to price rises. While the impact of inflation can affect the distribution of

household income and wealth, large increases in the price of items that make up a large

part of low-income household expenditure can have a far greater impact on these households, resulting in greater inequality in the distribution of real household income401.

Income inequality leads to an unequal opportunity to build capacity and resilience, and

accumulate assets. In 2007-08 inequality in income distribution in Australia was below the

Organisation for Economic Cooperation and Development (OECD) average, but income

inequality was greater than it had been in 1994-95, with wealth inequality also high. Tax

concessions tend to reinforce this inequality by supporting wealthier Australians through

housing-related tax concessions and benefits, and superannuation402.

Tasmanian Context

The mean equivalised disposable household income of all households in Tasmania in

2007-08 was $659 per week (compared with $811 per week nationally). Tasmania and

South Australia both had mean equivalised disposable income below the national average.

398 Earnings refer to Persons; Full Time; Adult; Ordinary time earnings, Trend. See Australian Bureau of Statistics 2011,

Average Weekly Earnings, Australia, Feb 2011: Tables 1 and 11F (cat. no. 6302.0). Data is also presented in Tasmania

Together Indicator 9.1.4: Tasmanian average weekly earnings as a proportion of national average weekly earnings. See

www.ttbenchmarks.com.au 399 Australian Bureau of Statistics 2011, Consumer Price Index, Australia, Mar 2011 (cat. no. 6401.0) 400 The increase in the value of money (CPI) has been deducted to put quantities of dollars into real terms. This allows a

comparison of the quantity of income without the effects of inflation. 401 Australian Bureau of Statistics 2010, Measures of Australia’s Progress, Sep 2010: Inflation (cat. no.1370.0) 402 Arashiro, Z, Aug 2010, Financial inclusion in Australia, p.6

86

The Australian Capital Territory, the Northern Territory and Western Australia had the

highest mean incomes (27%, 8%, and 6% above the national average respectively).

MEAN EQUIVALISED DISPOSABLE HOUSEHOLD INCOME PER WEEK, 2007-08

The high income levels reflect in part the younger age profile of the Australian Capital

Territory and the Northern Territory and the greater number of employed persons per household. The Australian Capital Territory and the Northern Territory both had an

average of 1.5 employed people in the household, while Western Australian had an average

of 1.4 employed people. By contrast, Tasmania had the lowest average of employed people in the household at 1.1, followed by South Australia at 1.2. The Australian average

was 1.3403.

NUMBER OF EMPLOYED PEOPLE IN THE HOUSEHOLD, 2007-08

Nationally, average incomes were lower for lone person households, due to the restricted number of employed people in the household. In 2007-08, more than one-quarter (27.7%)

of Tasmanian households were lone person households compared with 24.8% nationally404.

In 2007-08, the average equivalised disposable household income in Tasmania ($659) was 20.5% higher than in 2003-04 ($547). This was partly due to improvements in measuring

income introduced in the 2007-08 cycle405.

403 See Australian Bureau of Statistics 2009, Household Income and Income Distribution; SIH 2007-08 Datacubes: Table 16

(cat. no.6523.0) 404 See Australian Bureau of Statistics 2009, Household Income and Income Distribution; SIH 2007-08 Detailed tables: Table

16A (cat. no.6523.0) 405 See Australian Bureau of Statistics 2009, Household Income and Income Distribution: Appendix 4 (cat. no.6523.0) for

more information.

87

For low-income households in Tasmania, average equivalised disposable household income

grew by 13.6% ($43 per week) from 2003-04 to 2007-08. For middle income households

the rise was 18.5% ($90 per week), and 26.3% for high income households ($261 per week). This indicates that the gap between low and high income households has widened

over recent years406.

CHANGE IN MEAN EQUIVALISED DISPOSABLE HOUSEHOLD INCOME PER WEEK,

Tasmania

While the mean equivalised disposable household income of all households in Tasmania in 2007-08 was $659 per week, the median (which is the midpoint when all people are

ranked in ascending order of income) was somewhat lower at $576 (compared with $692

nationally). This highlights the uneven distribution of income, where a small number of households have relatively high incomes, and a large number of households have relatively

low incomes407.

In 2007-08, Tasmania had a much higher proportion of low-income households (25.7%)

compared to Australia as a whole (19.7%). The proportion of middle income households was similar (17.9% and 17.7% respectively). However, Tasmania had a relatively lower

proportion of high income households (12.4%) compared with the national average of

20.6%.

Tasmania’s productivity (a measure of output for a given level of inputs) tends to be among

the lowest in Australia. This leads to lower than average wages408. In 2007-08, wages and

salaries were the principal source of income for 53.5% of Tasmanian households, compared with 61.5% nationally409.

In the February quarter 2011, Tasmanian average weekly earnings410 were $1 132.20

compared with $1 288.10 nationally. Compared to other states/territories, Tasmanian

average weekly earnings were the lowest.

406 Australian Bureau of Statistics 2009, Household Income and Income Distribution; SIH 2007-08 Detailed Tables: Table 1.1F

(cat. no.6523.0) 407 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia 2007-08; SIH 2007-08 Data

Cube: Table 16 (cat. no.6523.0) 408 State Tax Review Discussion Paper, Dec 2010, p.10 409 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia, 2007-08; SIH 2007-08 Data

Cube: Table 16 (cat. no.6523.0) 410 Earnings refer to Persons; Full Time; Adult; Ordinary time earnings, Trend. See Australian Bureau of Statistics 2011,

Average Weekly Earnings, Australia, Feb 2011: Tables 1 and 11F (cat. no. 6302.0). Data is also presented in Tasmania

Together Indicator 9.1.4: Tasmanian average weekly earnings as a proportion of national average weekly earnings. See

www.ttbenchmarks.com.au

88

AVERAGE WEEKLY EARNINGS, Full Time; Adult; Ordinary time earnings, Trend, Feb

quarter 2011

In the February quarter 2011, Tasmanian average weekly earnings were 87.9% of national

average weekly earnings. This was up from 84.9% in February 2006, when Tasmanian

average weekly earnings were $866.80 compared with $1 021.00 nationally411.

AVERAGE WEEKLY EARNINGS, Full Time; Adult; Ordinary time earnings, Trend,

However, lower wages were not the only reason for incomes in Tasmania being the lowest

in Australia. The high proportion of households dependent on government pension and

allowances as their principal source of income was also a contributing factor. In 2007-08,

one-third (34.1%) of Tasmanian households were dependent on government pensions and

allowances as their principal source of income. This was higher than the national average of 23.2 %, and was the highest of all states/territories412. Whilst still high, the proportion of

Tasmanian households reliant on government pensions and benefits was down from 36.6%

in 2003-04 (compared with 27.7% nationally)413.

411 Australian Bureau of Statistics 2011, Average Weekly Earnings, Australia, Feb 2011: Tables 1 and 11F (cat. no. 6302.0).

Data is also presented in Tasmania Together Indicator 9.1.4: Tasmanian average weekly earnings as a proportion of national

average weekly earnings. See www.ttbenchmarks.com.au 412 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia 2007-08; SIH 2007-08 Data

Cube: Table 16 (cat. no.6523.0). Data is also presented in Tasmania Together Indicator 1.1.2: Proportion of households where

primary source of income is government pensions or allowances. 413 Australian Bureau of Statistics 2011, Australian Social Trends; Sep 2010; Economic Resources Data Cube: Tasmanian

Data: Table 2.6, Australian Data: Table 1 (cat. no.4102.0.0)

89

PROPORTION OF HOUSEHOLDS DEPENDENT ON GOVERNMENT PENSIONS

AND ALLOWANCES, 2007-08

In 2008-09, three-quarters (76.7%) of retired Tasmanians relied on government pensions or

allowances as their principal source of income, compared with 64.9% nationally. This was

up from 65.1% in 2006-07 (65.5% nationally)414. In 2009, 74.1% of people of qualifying age were age pensioners, up from 69.9% in 2005415.

Of households whose main source of income was government pensions and allowances,

the proportion of all households in selected groups was as follows416:

86.0% of lone person households aged 65 years and over, compared with 76.3%

nationally;

81.8% of couple only households with a reference person aged 65 years and over,

compared with 64.5% nationally;

43.8% of one parent households with dependent children, compared with 44.8%

nationally; and

15.0% of couple with dependent children households, compared with 6.2% nationally.

Compared to other states/territories, Tasmania had the highest proportion of all of the

above household types dependent on government pensions and allowances, except for single parent households with dependent children, for which Tasmania had the third highest

proportion after New South Wales (49.7%) and South Australia (45.0%)417.

In 2009, the number of recipients of selected government payments In Tasmania were as

follows418:

Age pension: 59 000, up from 57 000 in 2008;

Disability Support pension: 26 100, up from 25 300 in 2008:

Newstart Allowance/Youth Allowance: 18 300, up from 16 000 in 2008; and

Single parent payment: 9 900, down from 10 600 in 2008.

414 Tasmania Together Indicator 1.1.8: Proportion of retired Tasmanians who rely on government pensions or allowances as

main source of income. See www.ttbenchmarks.com.au 415 Australian Bureau of Statistics 2010, Australian Social Trends, Sep 2010; Economic Resources Data Cube: Table 2.6 (cat.

no. 4102.0) 416 Australian Bureau of Statistics 2010, Australian Social Trends, Sep 2010; Economic Resources Data Cube: Table 2.6 (cat.

no. 4102.0) 417 Ibid 418 Ibid

90

RECIPIENTS OF SELECTED GOVERNMENT PAYMENTS, Tasmania

In Tasmania, one-third (33.8%) of all people employed in 2009-10 were employed on a

part-time basis419. Compared to other states/territories, Tasmania had the highest

proportion of people employed part-time and the Northern Territory had the lowest

(19.7%). The national average was 29.9%. The proportion of people employed part-time

in Tasmania has risen over time, up from32.1% in 2005-06. In 2009-10, of total males employed, 17.6% were employed part-time, and of total females employed, 51.9% were

employed part-time. Of all people employed part-time in Tasmania, 23.5% would prefer to

work more hours420.

Unemployment can impact substantially on household income, wealth, health and social

inclusion. During a period of unemployment, households are likely to spend their savings,

increase borrowings and accumulate debt421. In 2006, the unemployment rate for Tasmania was 6.6%422. The highest rate of unemployment (10.3%) was in the George Town Local

Government Area (LGA), followed by Kentish and Tasman (both 9.6%) and Break O'Day

(9.2%). The lowest rates of unemployment were in King Island (2.2%), Flinders (3.8%) and

Circular Head (4.2%) respectively423.

Around the Hobart area, the highest rate of unemployment was found in the Derwent

Valley (9.0%) and the lowest was in Kingborough (4.5%).

419 Annual average of people employed part-time for the year ending 30 June 2010. See Australian Bureau of Statistics

2011, Australian Social Trends, Dec 2010 : Work Data Cube; Table 2.6 (cat. no. 4102.0) 420 Australian Bureau of Statistics 2011, Australian Social Trends, Dec 2010 : Work Data Cube; Tables 2 and 2.6 (cat. no.

4102.0) 421 Melbourne Institute of Applied Economic and Social Research, The University of Melbourne 2010, Families, Incomes and

Jobs, Volume 5: A Statistical Report on Waves 1 to 7 of the Household, Income and Labour Dynamics in Australia (HILDA)

Survey, p.47 422 2006 ABS Census of Population and Housing. The Census and the Labour Force Survey differ in scope and

methodology. Therefore labour force estimates from the two are not directly comparable. The differences are fully

explained in the October 2006 edition of ABS Labour Market Statistics (cat. no. 6105.0) 423 Australian Bureau of Statistics 2011, Tasmanian State and Regional Indicators, Dec 2011; Labour Data Cube: Table 10

(cat. no. 1307.6)

91

UNEMPLOYMENT RATE, by Local Government Area, August 2006

In the five years since 2006, there have been substantial changes in the Tasmanian labour

force. The unemployment rate424 dropped from 6.6% in April 2006 to a low of 4.0% in July-

August 2008. By May 2010, it had climbed to 6.2%, before falling again to 5.5% in October-

December 2010. From January 2011 it has remained steady at 5.7%. The Tasmanian unemployment rate was below the national rate for 18 consecutive months, from June

2008 to November 2009. However, from December 2009, it has been above the national

rate once again425.

UNEMPLOYMENT RATE

424 In trend terms. For further explanation see Australian Bureau of Statistics 2011, Labour Force, Australia, Apr 2011:

Explanatory Notes; Seasonal Adjustment and Trend Estimation (cat. no. 6202.0) 425 Australian Bureau of Statistics 2011, Labour Force, Australia, May 2011: Time Series Spreadsheets; Tables 01 and 09 (cat.

no. 6202.0)

92

Meanwhile, the number of long-term unemployed (those unemployed for 12 months or

more) in Tasmania has declined over time, from 6 900 people in 2001 to 3 000 in 2010426.

In 2009-10, the long-term unemployed accounted for 21.0% of all unemployed people in Tasmania, down from 25.1% in 2006427. Despite this decline, Tasmania continued to have

the highest proportion of long-term unemployed of all states/territories. The Northern

Territory had the lowest at 8.6%428.

The phenomenon of jobless households in Australia is particularly prevalent in households

with dependent children. Jobless households are defined in the Household, Income and

Labour Dynamics in Australia (HILDA) Survey as those “in which no household member

was in paid employment (or on paid leave from employment) at the time of interview”429. Nationally, the proportion of jobless households declined from 11% in 2001 to 7% in 2007.

Sole parent families had the highest rate of joblessness, but this rate also experienced a

decrease, from 33% in 2001 to 24% in 2007430.

Living in a jobless household can impact on a child’s participation in education431. In 2007-

08, 20.4% (or one in five) of all children aged under 15 years in Tasmania lived in families

where no resident parent was employed, compared with 12.6% nationally. This was the

highest proportion of children living in jobless households of all states/territories432. After a steady rise from 18.7% in 1998 to 24.4% in 2003-04, the proportion of children living in

jobless households in Tasmania has since been in decline433.

A household is defined to be job-poor by the HILDA Survey if “the total usual hours of

paid employment of all household members combined are less than 35 hours per week”.

These households are likely to receive a proportion of their income through income

support payments. Despite experiencing a decline from 26% in 2001 to 22% in 2007, the proportion of job-poor (or “working poor”) households in Australia remains substantial434.

In 2007-08, compared to other states/territories, Tasmania had the highest proportion

(34.1%) of households dependent on government pensions and benefits as their principal

source of income. The national average was 23.2%435.

Government pensions and allowances contributed436:

90% or more to gross household income for 21.5% of Tasmanian households;

50% to less than 90% to gross household income for 12.3% of Tasmanian households;

20% to less than 50% to gross household income for 9.9% of Tasmanian households; and

1% to less than 20% to gross household income for 19.9% of Tasmanian households.

426 Tasmania Together Indicator 1.1.9: Number of Tasmanians who are long-term unemployed. Source: Australian Bureau

of Statistics 2011, Labour Force, Australia, Detailed – Electronic Delivery, Mar 2012 (cat. no. 6291.0.55.001) 427 Australian Bureau of Statistics 2011, Australian Social Trends, Dec 2010 : Work Data Cube; Table 2.6 (cat. no. 4102.0) 428 Ibid Table 2 429 Melbourne Institute of Applied Economic and Social Research, The University of Melbourne 2010, Families, Incomes and


Survey, p.67 430 ibid, p.68 431 Adams, D. 2009, A Social Inclusion Strategy for Tasmania; Appendix 1: The Evidence for Social Inclusion in Tasmania, p.A1.54 432 Australian Bureau of Statistics 2011, Australian Social Trends, Dec 2010 : Family and Community Data Cube; Table 2

(cat. no. 4102.0) 433 ibid. table 2.6 434 Melbourne Institute of Applied Economic and Social Research, The University of Melbourne 2010, Families, Incomes and


Survey, pp.67-68 435 Australian Bureau of Statistics 2009, Household Income and Income Distribution, Australia, 2007-08: SIH 2007-08

Datacubes; Table 16 (cat. no. 6523.0) 436 Ibid

93

This means that government pensions and allowances contributed to gross household

income to some extent for almost two-thirds (63.7%) of Tasmanian households, compared

with 54.5% nationally. This was the highest proportion of all states/territories. The Australian Capital Territory had the lowest proportion at 37.6%437.

437 Ibid

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progress Cities - dpac.tas.gov.au · consumer price index labour price index income and household expenditure survey ... While the Tasmania Together cost of living figures peaked