The Household, Income and Labour Dynamics in Australia juggernaut has rolled into town for 2018.
The longitudinal study has been monitoring the experiences of thousands of Australians households for more than a decade, allowing policymakers to better understand trends and plan responses.
If you have time, you can read the full report on the Melbourne Institute website.
If you don’t, here are four key takeaways from today’s report—and suggested solutions from the VCOSS policy team.
- WATCH THE GAP
Income inequality is getting worse
Australia has higher income inequality than most other wealthy nations and poverty rates remain high, with 9.4 per cent of Australian households living below the poverty line.
Between 16 and 20 per cent of people living in single parent families are living in poverty, and rates are also high among elderly people. Worryingly, children in single-parent families are twice as likely to live in poverty that children in couple-parent families.
This echoes the ACOSS Inequality in Australia 2018 report released today, which states “the reality of income inequality in Australia will come as a shock to many”. It shows that a person in the highest 20 per cent income group lives in a household with five times as much disposable (after tax) income as someone in the lowest 20 per cent ($3,978 per week on average in 2016, compared with $735 per week).
VCOSS supports ACOSS’ calls to increase the single rate of Newstart, Youth Allowance and related payments, and to substantially increase real minimum wages.
- POWER STRUGGLES
Yes, power prices really are going up
Energy costs continue to rise for Australian households. Average home energy expenditure has risen in real terms from $1,727 per year in the 2006 to 2008 period to $2,118 in 2016.
Home energy expenditure is a particularly large share of household income for households in the bottom 20 per cent of the income distribution: the income share of home energy expenditure is approximately four times that of the top income quintile. This aligns with an emerging body of research, including the VCOSS Power Struggles report, showing that people are making sacrifices to pay utility bills, including cutting back on food and going without heating, cooling or lighting.
VCOSS urges government to regulate for fair energy prices, and to increase access to energy efficiency for low-income and disadvantaged households, including a mandatory energy efficiency standard for rental properties.
- HOUSE OF HORROR
Housing stress is real
Housing stress is an increasing problem for Australian households.
In 2016, well over 10 per cent of the population had housing costs in excess of 30 per cent of household income, with more than 20 per cent of single-parent families in housing stress.
The same picture emerges in Victoria. The VCOSS Submission to the Victorian Parliamentary inquiry into the Public Housing Renewal Program demonstrated that rental stress locally has jumped by 25 per cent in just two years, with over 140,000 low income households now affected, and that just 5.7 per cent of private rental properties are affordable for people on income support.
To address housing stress, VCOSS recommends reforming property taxes to promote housing affordability, building 3,000 extra public and community homes each year and including public and community housing in new developments.
- IF I HAD A DOLLAR…
Financial stress is biting
Single-parent families are particularly prone to financial stress, an inability to meet basic financial commitments because of a shortage of money, while non-elderly single people also have relatively high prevalence rates. Health and disability of household members have substantial impacts on the risk of financial stress, as do renters in the private rental market.
Approximately 54 per cent of people who were in financial stress in one year were also in financial stress the following year.
VCOSS believes with costs outpacing incomes, and household debt at historic highs, now is an opportune time to invest in people’s financial capabilities. Our 2018 Election Platform states that a thoughtful and considered collaboration to respond to financial distress can help households avoid financial pitfalls, without having to make desperate trade-offs between bills and food, or resorting to predatory loans.
We recommend strengthening the financial counselling network, directly funding financial crisis assistance services, and directing people away from predatory lenders like payday lenders and pawnbrokers.