SACOSS is today releasing our latest cost of living report highlighting the impact of high petrol prices and their volatility, particularly on lower income and regional consumers.
SACOSS CEO Ross Womersley says, “Over the last two years fuel prices in Adelaide have risen 30% (as per the latest figures from the end of the September quarter), and the average South Australian household now spends around $50 a week on petrol.”
“We’ve seen fuel prices go up and down since then, and volatility is hard to budget for – with sharp hikes creating hardship for people who don’t have extra money to cover unexpected increases.”
“This adds to the financial difficulty confronting low income people. These drivers don’t always have the cash to fill up on lower-price days. Moreover, this is especially challenging for regional drivers who have fewer choices when it comes to shopping around.”
The report finds that:
- The average South Australian household spends around $50 a week on petrol, accounting for 3.3% of household income;
- Households in the lowest income bracket spend a higher proportion of their income on fuel, around 4.6% of household income;
- Petrol prices in regional areas are less volatile than in Adelaide, but are generally slightly more expensive with additional transport costs and less retail competition;
- Regional households spend around 11% more on fuel than those in Adelaide.
There has been much public comment recently about “record high” fuel prices. Our report, which looks deeper into the issue of affordability, shows that the story is a bit more complicated.
“For starters, it’s not easy to track petrol prices due to enormous volatility. For example a recent Adelaide 6-week cycle showed a 27c per litre gap between high and low prices,” says Womersley.
“And any longer term analysis depends on where you take the starting point. For example, a 10-year period from the September quarter in 2008 shows prices increasing at below the general inflation rate – meaning that petrol is significantly cheaper in real terms now than then. But move the start point by just one quarter and that result disappears, with price rises in-line with inflation!”
“Another complexity is that the ABS Household Expenditure Survey data shows that average expenditure on petrol by SA households decreased in real terms between the 2009/10 and 2015/16 surveys, but expenditure actually increased as a percentage of household income.”
“The issue is not just about prices, but also fundamentally about income.”
“The truth is that options are limited for governments to stop petrol prices rises because prices are set on international markets. Recent prices have also been pushed up by the decline in the value of the Australian dollar.”
“On the other hand governments have ways to address the pressing problem of affordability.”
“They can directly help people struggling to get by boosting incomes. This includes raising the minimum wage, making changes to industrial relations regulation, and increasing the social security safety net by raising the rate of Newstart and other income support payments.”
“For people on low wages or in casual work, where they’re working more hours to maintain real incomes, or for those reliant on social security payments like Newstart which have not risen in real terms in over 20 years, the cost of living pressures are very real.”
“Helping people in our community who are struggling the most is a much more effective response to cost of living pressures than simply hand-wringing over fuel price increases.”