ECC Energy Update - October

by Jordan Valageorgiou - Tuesday, 25 October 2011

Cost of Living and Energy Price Increases

Media reports suggest that more and more people are feeling the pressure from rising living costs. In the first half of 2011 alone, cost of living issues were mentioned 1,595 times in major capital city newspapers—already exceeding the 1,362 press mentions recorded over the whole of 2010. Steeply rising utility prices have been a central issue in this media commentary.

Household expenditure

The 2009-10 Household Expenditure Survey (HES) data, newly released by the Australian Bureau of Statistics (ABS), allows us to investigate the impact of these spectacular price increases. The HES, which was last taken in 2003-04, offers a snapshot of where Australian households direct their expenditure, making possible an analysis of the extent to which households are spending more or less on particular goods and services, and of the proportion of income/expenditure directed to particular items.

Perhaps surprisingly, the Consumer Utilities Advocacy Centre’s (CUAC) analysis of HES data indicates that utilities* as a proportion of both expenditure and income for all income quintiles** has remained fairly constant.

While the level of expenditure as a proportion of income/expenditure has not increased dramatically, the gross level of expenditure on these goods and services has. For example, between 2003-04 and 2009-10, the average household‘s weekly expenditure on utilities increased 37 per cent from $29.57 to $40.46.

Interestingly, however, Australian utility prices increased around 54 per cent over the same period, probably suggesting a decline in the average household‘s utility consumption. This may be partly a result of householders responding to price increases, combined with growth in the prevalence and effectiveness of energy and water efficiency programs.

Income and income support

In reflecting upon these figures, an important issue to consider is the substantial growth in incomes between 2003-04 and 2009-10. This also applies to the Disability Support and Age Pensions, which were increased in 2009—potentially accounting for some of the income increase for the lowest income quintile in the 2009-10 HES.

At the same time, however, unemployed people and students on income support (including nearly 560,000 Australians on the Newstart Allowance) have not seen a commensurate increase in payment rates. This group of people on low and fixed incomes would be particularly exposed to recent utility price increases.

Who is average?

Surveys like the HES provide us with useful information, but caution is needed when attempting to generalise from an ‘average‘ figure to the experience of individuals and groups. For example, HES figures for the lowest income quintile encompass households on either side of this average figure—there is no single set of experiences and circumstances common to low-income consumers.

A fuller picture requires that we take into account a range of indicators, and look closely at sections of the community that may be particularly affected. The ECC is conducting research into the concerns and issues for CALD households and small businesses to gain a better idea of the impact of these increases on the ECC’s constituency.

ECC’s position

The ECC will continue to work on ensuring that CALD communities receive the knowledge and develop the skills to reduce their energy use and costs.

The staff of the ECC, including the bilingual educators, recently received accredited training in Energy Efficiency from TAFE NSW.  This will assist them in their work with community groups and at festivals to provide information to their communities about how to reduce their energy and water use and their utility costs.

*  Utilities includes electricity, gas and water