Jan 25, 2014

Is the cost of living rising in Australia?

To many people, this would seem to be a silly question. Utility bills are going through the roof, healthcare costs are rising, health insurance premiums rise by a ridiculous amount every year, petrol costs three times what it used to, rent is higher than ever.... of course the cost of living is rising.

To the economists who disagree though, the cost of living is stable or even falling. Food is cheaper, clothing, books, toys and music are cheaper, and wages are higher.

My Twitter feed is full of snark about Cashed Up Bogans driving their SUVs to their huge McMansions and whinging about the high cost of gas and water while Brianna and Tyson have every toy and gadget in the world.

Or middle class whingers who complain about petrol and utility bills while unable to appreciate how cheaply they get their clothing.

According to this school of thought, which includes many economists, the middle class has no right to complain about the cost of living when most things they buy are cheaper than ever.

Wrapped up in these arguments are political and moral beliefs too, about the carbon tax, house size, sustainable living, consumption, public vs private school, cars vs public transport, and value judgments about what people spend money on. There is also annoyance or embarrassment at the tendency of Australians to forget we live in a prosperous country whose economy has survived the GFC and the Great Recession lightly compared to most other places. There is also anger from those who are locked out of the housing market and forced into ever-higher rentals, at those who are paying off mortgages daring to complain.

In short, there is more than a touch of judgement from some (who forget they are also, mostly, middle class) at the middle-class who can't see what they are spending every week while complaining about the cost of living.


Most people I know are middle class. I can pretend it is otherwise, and I can pretend to be something I'm not, with my history of low-paid work, my husband who works in hospitality and our 8-year-old car. But we're middle class, as are the majority of people running the commentary on Twitter, on radio and in the newspapers.

I won't pretend to be without privilege. But we don't have savings, our kids go to the local public school, and we live with low-level financial stress on a monthly basis. Like other families we know, we juggle bills: I mean really juggle them, paying the meanest ones first and letting the more lenient ones slide, always playing catch-up and always behind. It depresses me that we don't have more, that at our age we are still living, basically, paycheck to paycheck.

While I don't accept that raising kids is a "lifestyle choice" (it's actually biology), I do accept that we have chosen our way of life. We've chosen to buy a house and spend most of our money paying it off and we know that raising kids is expensive. It's why we have two kids instead of three. (Well, it's most of the reason why).

I know full well that we buy clothes, toys, books, music and stuff pretty cheaply. I know I spend more than I need to by driving to work, and buying my lunch on work days. I know my kids have far too many toys. I know we negated the savings we should have made when we cut out pay TV six years ago, by buying a million DVD kids' movies since then.

But I also know that utility bills, health insurance and the cost of filling my car have increased by 50% or more in the last few years. And our income has dropped - a lot.  My salary is 60% of what I earned before 2008. Looking back now, it seems like I was on a pretty good salary back then. I was, but it was not high for the work I did, in my field, back then. I was always trying to earn more, constantly aware that I was "behind" others who earned more. I may have worked for a big American stockbroker, but I was no fat cat. It was also pre- credit crunch, so I was carrying a lot of debt, and spending way more than I do now.

I'm happier now, and I was very happy to be made redundant and apply a circuit breaker to my life. And I know I was very lucky. I got my redundancy, took a few months off work, and got to start a new job with people who knew me, working fewer hours and doing work I really enjoy. All that is amazing, and I know it.

But even for us lucky ones, the cost of living is higher than it was, and it is harder to manage the budget. The fact we are lucky doesn't make that less true.

Knowing my own experience and our much-reduced income since 2008, I often think of the thousands of others who have been laid off since then, or whose businesses have failed. Try telling them the rising cost of living is all in their heads.

I think while many costs have fallen over the years (things we buy), and we are certainly taxed lower than in the past, bills are higher, and costs in general are more diffuse now.  Thirty years ago you earned less and you might have paid 40% income tax, and you didn't buy as much stuff, but your rent/mortgage payments were lower, utilities were much cheaper, and there were fewer bills to grapple with. You didn't have to compare costs for insurance, let alone "choose" your utility providers, and you had fewer bills and expenses. Bills might be electricity OR gas, water and telephone (no internet, mobile phone, pay TV, and there were fewer types of insurance to cover), and your weekly expenses might be travel/petrol, groceries and an amount set aside to cover clothing and other bits and pieces. I'm not saying things were better. And I have no desire to go backwards.  But there were simpler bills, fewer things to buy and less money to spend, and budgeting was once much, much easier than it is now.


  1. Yes prices are going up (in Canada) and if you are a senior your wages are NOT going up. Still...we have nothing to complain about. I am addicted to budgeting, enjoying the challenge. I have learned where we were wasting money and have adjusted my habits accordingly. It doesn't mean giving up everything you enjoy...just being sensible about it.

    1. I'm certainly better at budgeting than I used to be, through necessity!

  2. I think the items where prices have come down are in the discretionary income column. Necessities have gone higher, so I agree the COL is much higher for the middle class. It is a real problem.

  3. I think Joeh has the right angle. Also as you get older you seem to spend less discretionary money and more of your income goes towards essentials. Really though, we are our own worst enemies because of the lifestyles we have set up for ourselves, but is it wrong to want to be able to live like our neighbours and friends do? Companies and government have a very firm grip of us all.

    As for essential services, I very strongly object to local and foreign companies making profits by supplying electricity, water, gas, public transport and roads.

    1. Your first paragraph is spot on.
      And I agree with your second as well - I know the old utility companies may have been inefficient and would have got more expensive, but I feel something close to rage at what has happened through privatization of these things.

  4. "Back then", bills weren't electricity OR gas, you either had all electric or you had both. Gas for cooking and hot water and electricity for the lights and appliances. Just like now. But both were government owned and reasonably cheap, in spite of wages being lower then.
    As for things we buy being cheaper, that's because they are made in third world countries where the wages are next to nothing, but as well as that the quality of goods has decreased, things aren't made to last anymore, so we have to buy more often. Remember when it was cheaper to repair a washing machine? Now it's cheaper to buy a new one. Remember when good quality clothing had decent seam and hem allowances? And the fabric was strong enough to last more than a year or two? Remember when a t-shirt DID'NT pull all out of shape in the first wash? Look closely at the weave (knit) of the t-shirt fabric and see how it is not straight, but twisted so the side seams skew after a wash. And for this we pay too much.
    The cost of living is definitely rising.

    1. That's definitely true too River - yes the clothes and gadgets are cheap but they don't last and we have to keep buying them. Very true.
      My mother used to sew a lot of our clothes and I made a few things myself when I was younger, but these days sewing clothes costs twice as much as buying them, so we don't.
      It's true though, none of my clothes these days lasts more than a couple of seasons even when I buy something a bit more expensive.

  5. Hi Jackie, yes there's a lot of hurt out there that's not visible to the naked eye. We're a two-speed economy and economic rationalisation through new technology isn't helping. I try to go through checkouts instead of the swipe aisles at supermarkets and walk into the counter at service stations rather than swipe my card at the pump, plus as many other small things that I can find that might preserve jobs for the youngies. I totally agree with your last statement, we need simpler bills and fewer things to buy - the choices are horrific, surely the car industry is failing because of that very thing. Thanks for a good strong post. And by the way, this is Joan from wherethebooksare.com - I ticked the open ID box for the comment so don't know if it will show my name.

    1. Thanks so much for reading and commenting Joan - I was a bit nervous about posting this as there is so much snark on Twitter about the greedy and well-off middle class always complaining... And yet when I look around me that's not what I see, I see people from lots of different backgrounds struggling and too many people telling them it's all in their heads. No it isn't! I agree with your comments, it is hard to manage finances when everything is so...all over the place.



Related Posts Plugin for WordPress, Blogger...