Life is free, but not cheap

Port Douglas & Mossman Gazette - - FRONT PAGE - John Rolfe

YOU can fi­nally put a price tag on life: $2.17m.That’s the grand to­tal for the aver­age Aus­tralian to pay for food, ed­u­ca­tion, hous­ing, health, trans­port, recre­ation and all the other basics of liv­ing from cra­dle to the grave.

Us­ing ABS re­search and eco­nomic anal­y­sis, the fig­ure es­ti­mates just how much money goes into keep­ing us happy and healthy for our aver­age life ex­pectancy, which is near­ing 82 for a child born to­day.While dif­fer­ent peo­ple will spend dif­fer­ing amounts, our anal­y­sis shows the aver­age Aussie spends more than $400,000 on hous­ing, nearly $350,000 on food and non-al­co­holic drink and a per­haps sur­pris­ingly high $332,424 on trans­port dur­ing their life­time.

Recre­ation racks up nearly $260,000, fol­lowed by health ex­penses ($123,958) and run­ning your house­hold.Just over $72,000 will take care of your cloth­ing re­quire­ments, while $61,375 will pay for petrol for your car and power for your home.

And to­bacco and al­co­hol alone will set you back more than $80,000.

The bad news is that the multi-mil­lion dol­lar price tag has gone up 50 per cent in a decade. The big­gest jumps since 2003-04 have come in hous­ing, health and ed­u­ca­tion.

Re­search from IBISWorld, com­mis­sioned re­veals that in to­day’s dollars five years of rent­ing would cost nearly $92,000 - 51 per cent more than what a child born in 2003-04 could ex­pect to pay.

Likely preschool costs were also found to have soared, up 50 per cent to $13,760 in cur­rent terms, while med­i­cal ex­penses were fore­cast to be $1000 a year or nearly 30 per cent higher at $4450 ver­sus $3450. IBISWorld in­dus­try an­a­lyst Craig Shul­man said the big in­crease in the likely cost of rent was due to re­stric­tions on hous­ing sup­ply and greater num­bers choos­ing to avoid mort­gage obli­ga­tions.This was driv­ing up de­mand for properties for lease.

Pre-school bills were on the rise be­cause of leg­is­lated staffing re­quire­ments stan­dards were higher, but so were costs, Mr Shul­man said.

‘‘Many of the trends that have in­flu­enced price changes over the past 10 years are ex­pected to con­tinue,’’ he said.

‘‘A lower Aus­tralian dol­lar and low in­ter­est rates will lead to in­ter­na­tional in­vestors in­creas­ing their in­volve­ment in the res­i­den­tial prop­erty mar­ket in com­ing years, lead­ing to fur­ther rises in hous­ing prices.’’

The good news is that Mr Shul­man’s anal­y­sis also re­veals that in­comes have grown faster than the cost of liv­ing.

Over the decade to 2013-14, and ac­count­ing for in­fla­tion, IBISWorld said earn­ings had in­creased 11 per cent.‘‘The stan­dard of liv­ing is im­prov­ing,’’ National Cen­tre for So­cial and Eco­nomic Mod­el­ling (NATSEM) prin­ci­pal re­searcher Ben Phillips said. He de­fined the stan­dard of liv­ing as wages mi­nus ex­penses.

Re­search by Mr Phillips shows that, for the one-third of house­holds with mort­gages, the cost of liv­ing has not budged for the past two years. This is be­cause home-loan rates have been fall­ing. For most bor­row­ers they are now un­der 6 per cent. Some are pay­ing less than 5 per cent.

‘‘What might be a risk into the fu­ture is peo­ple get­ting used to low in­ter­est rates. What goes down comes up,’’ Mr Phillips said.

The es­ti­mated to­tal ‘‘cost of liv­ing’’ has been cal­cu­lated by ex­trap­o­lat­ing the most re­cent ABS House­hold Ex­pen­di­ture Sur­vey us­ing the lat­est Con­sumer Price In­dex, then mul­ti­ply­ing it by the aver­age life ex­pectancy.

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