New data reveals where Australian households are really spending and saving

Since 2003, Australia’s had the resources boom mark I, the global financial crisis, three prime ministers and now the recovery which perhaps isn’t.

But if people are feeling poorer now than they were back then, the figures don’t bear that out.

According to the Australian Bureau of Statistics, real living standards actually rose from 2003-04 to 2009-10, with the proportion of household expenditure on recreation, household furnishings, equipment and transport rising in line with increases in net worth.

CommSec chief economist Craig James says it is clear that “Australians have continued to get richer over time and thus are spending a greater proportion of their incomes on non-essential goods and services like pay TV connections and the internet.”

”The latest data also confirms that consumers are saving a far greater proportion of their incomes, meaning that households are well placed to deal with tougher economic conditions,” James says.

James says the Reserve Bank has an opportunity to relieve household pressure by cutting rates. The central bank kept rates steady at 4.75% yesterday, citing turmoil in the US and Europe.

“What is clear from the latest survey is that the process of cutting interest rates remains the most effective way that the Reserve Bank could provide relief for households from higher living costs.”

“Latest data shows that a record 36.2% of Aussie families are paying off a mortgage and mortgage payments dominate weekly spending.”

The Household Expenditure Survey, conducted every six years, finds that the average Australian household spent $1,236 per week on goods and services in 2009-10, an increase of 38% ($343 per week) from the previous 2003-04 survey.

“In contrast, prices as measured by the consumer price index increased by 19%, indicating a rise in real living standards over the five years,” the ABS says, meaning real spending growth has averaged 3.2% per year over the six years.

“Over the same period, the mean gross household income per week increased by 50% and the average household size increased from 2.53 to 2.57 people.”

Those in telecommunications, pay television, hospitality and childcare have been the winners. The survey finds Australians spent:

• 152% more on internet charges in 2009-10 than in 2003-04.
• 95% more on pay TV.
• 84% on childcare payments.
• 68% more on meals in restaurants, hotels and clubs.
• 50% more on fast food and meals out.
• 75% more on interest payments on mortgages.
• 68% more on rent payments.

Expenditure on food and non-alcoholic beverages rose 34% (or $51) from the 2003-2004 survey, while housing costs lifted 55% ($80), recreation costs lifted 41% or $47. Education fees for primary and secondary schools soared 107% or $10.

The survey also finds that housing, food and transports accounts for half of household expenditure. The next largest category is recreation, sucking up $161 per week or 13% of total expenditure.

Housing costs of $223 per week now represent 18% of total expenditure on goods and services, a 2% lift from the previous survey and now a record high.

Food and non-alcoholic beverages costs of $204 per week are 17%, which is down from 16.5% in the previous survey. Transport costs, at $193 per week, are 16% of the total.

In bad news for rag traders, spending on clothing has fallen, while fuel and power costs have remained steady at 2.6% of expenditure.

Petrol cost dropped slightly to 3.09% of total expenditure. Weekly expenditure on electricity, at $33 per week, equalled spending on alcohol.