14 November 2011

Cost of living hits oldest, poorest hard, new report finds

We’re all feeling the pinch but rising energy, food and health costs are disproportionally hitting our oldest and poorest Australians, a new report has found.

In an analysis of household spending, the National Seniors Productive Ageing Centre report answers its question Are Older Australians Being Short Changed? with a resounding ”yes”.

While most Australians have noticed rising living costs, National Seniors chief executive, Michael O’Neill, says age pensioners and low-income self funded retirees, in particular, are trapped by circumstances.

“When it comes to the cost of living it’s a catch-22 for older Australians; they just can’t get a break. The problem lies with retiree consumption patterns which, ironically, are dictated by the fact of their low, fixed incomes.

“The income of a single 70-something is barely a third of the over 50s average. This means they can only afford to spend on essentials such as food, energy and health which, year after year, are outpacing inflation.

“As a result they’re paying 70 percent more of their household income on electricity, and three times more on health than younger Australians.

“Once those essentials are covered, there’s very little left for the things that are actually becoming more affordable such as cars, white goods and clothing,” said O’Neill.

“We’re talking about the stoic, pre-boomer generation, the children of the Depression. They’re not complaining, they’re doing without and they’re getting by growing their own vegetables or foregoing house repairs.

“Policy-makers need to know that, despite claims that Australians are wealthier than they’ve ever been, some people are quietly doing it tough.

“Most importantly, as a nation we should be asking how it is that electricity and water prices can increase by 60% in five years,” said O’Neill.

The report uses ABS Consumer Price Index (CPI) and the Melbourne Institute’s Household, Income and Labour Dynamics data to examine how cost of living pressures are being distributed across the population.

Since 2006, water and sewerage have increased by 62%; electricity by 61%, medical services by 33% and rent by 32%. In the same period, audio, visual and computing goods dropped by 54%; childcare by 25%; shoes by 9.9%; and household appliances 7.5%.

Recognising the limitations of the CPI, the Rudd government introduced a pensioner-specific basket of goods upon which to index the age pension in 2009.

Download a copy of the report here.

Michael is available for comment

Media contact: Sarah Saunders 0409 055 156

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With a quarter of a million members Australia-wide, National Seniors is the consumer lobby for the over 50s. It is the fourth largest organisation of its type in the world.