SUMMARY – Extract
Energy prices have risen significantly in recent years.
The price of electricity in Australia has increased by 117%, or 76% in real terms, in the last decade. Meanwhile the price of gas increased by 89%, or 53% in real terms. These high prices are being felt across the economy, by industry, by farmers, by business, and by households.
Households living with low incomes or experiencing disadvantage, who are paying disproportionately more of their income on energy than the national average, are more likely to experience energy stress. Combined with the current housing affordability crisis, low wage inflation, long-term unemployment and only one job for every eight people looking for paid work, higher energy costs have had serious consequences for some households. Some have been tipped over the edge, and are going without heating and cooling, meals, and other basic essentials in order to afford their energy bills.
To inform the development of appropriate policy solutions, policymakers need to better understand who is most impacted by high electricity prices.
ACOSS and the Brotherhood of St Laurence (BSL) commissioned Associate Professor Ben Phillips, from the ANU Centre for Social Research and Methods, to analyse the cost of energy (electricity and gas) for a range of household types in Australia. The modelling is based on the Household Expenditure Survey (HES) undertaken by the ABS, and includes trends between 2008 and 2018.
High prices are hitting certain population groups hard
The report finds that some groups are paying disproportionately more of their income on energy bills, and this has risen since 2008, contributing to an increase in inequality and poverty. These groups include:
- People receiving Newstart and similar allowances, with a quarter spending more than 9.7% of their income on energy (electricity and gas); and
- People on low incomes (those in the lowest 20% of the income spread), with a quarter spending more than 8.8% of their income on energy.
Low-income households are hit hardest
On average, low-income households spend 6.4% of their income on energy, while high-income households (highest 20% of the income spread) spend far less relative to their incomes – an average of 1.5%. This is despite the fact that low-income households appear to use less energy, spending less in dollar terms per year. The main income source for roughly 65% of these households is social security like pensions, and for another 20% it is from wages and salaries.
ALSO inlcudes Research Note: Trends in Household Energy Expenditure3 by Associate Professor Ben Phillips from the ANU Centre for Social Research and Methods, September 25th 2018, pp. 10-25.
SOURCE: Phillips, Ben. “Energy Stressed in Australia.” ACOSS, October 2018.
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia