Times getting tougher in Australia

AUSTRALIANS’ living standards are declining for the first time in a generation.

New Australian National University research for News Corp reveals cost increases have outstripped income gains by 1.4 per cent in the past year and 3.8 per cent since 2013 – a trend not seen since the 1980s.

The slide in living standards is mainly due to the weakest wage growth on record.

In the run-up to the Global Financial Crisis, pay rises were typically double the size they are now, said ANU associate professor Ben Phillips, arguably Australia’s foremost expert on movements in living costs.

“What’s changed, in terms of living standards, is wages are no longer growing at 3 or 4 per cent, they are growing at 1 or 2 per cent,” said Mr Phillips, who did the research.

“It’s just nothing like it used to be.”

Health-related bills have become the main source of budget pressure for most households across the country, the ANU analysis shows.

Medical and hospital expenses, including health cover, have recorded the biggest dollar increase since 2007. The most dramatic spike has been in NSW, where they have more than doubled to $4000-plus.

Another hit looms from April 1 when the latest annual insurance hike kicks in. It will add $120 to a $3000 policy. About half of all households have health cover.

The impact of the long-term rise in health bills is made more severe by steep increases in the cost of home and car protection, and electricity bills.

South Australians have felt the biggest power price jolt, up about $1200 to $2300 over the past 10 years. More than $450 of the rise there has come in the past year.

The single biggest cost jump nationally in 2017 was fuel, up on average by more than $200 per household as the oil cartel OPEC and nations such as Russia colluded to cut supply.

ANU’s Mr Phillips said the finding that medical and hospital expenses were hitting harder than energy costs would likely come as a surprise to many.

“That’s because these expenses aren’t as transparent as quarterly electricity bills,” he said.

“For your average everyday person, the biggest cost increase is medical and hospital expenses. It just doesn’t receive as much attention as power and petrol prices.”

From a national perspective, one expense paid by a minority of the population has inflicted an even bigger whack than health, insurance and electricity bills – rent. About a third of people rent.

The burden of mortgage repayments has been restrained by falling interest rates.

Reserve Bank of Australia data shows the typical variable home loan rate is more than three percentage points lower now than in 2007.

That said, many people have bigger loans than they did a decade ago.