Household income spent on energy hits new high for people on low incomes

12 October 2018: Householders’ income spent on energy in Australia is surging according to new research commissioned by the Australian Council of Social Service and the Brotherhood of St Laurence.

The analysis, conducted by the Australian National University (ANU), investigated the burden of electricity and gas costs for a range of household types in Australia between 2008 and 2018.

The research found some of the lowest income households in Australia spend more than 10% of their incomes on spiralling energy costs. Meanwhile, more affluent households spend significantly less of their income (1.5%) on energy.

This gap between low and high income households has also widened since 2008.

ACOSS CEO, Dr Cassandra Goldie, said, “This analysis confirms once again that people on low incomes are doing it the toughest, spending more of their income on the bare essentials.

“Having to pay more of their income on energy is a slap in the face for households already struggling with increasing costs of living, slow wage growth and unemployment.”

The research found the hardest hit Australian households were unemployed people on Newstart and Youth Allowance, who are studying or job hunting.

A quarter of Newstart or Youth Allowance recipients spend over 10% of their income on energy. A decae ago these households were spending 8% on energy. Single parents, pension households and renters are also highly vulnerable to energy stress.

“These very high levels of income spent on energy will be stressing many household budgets, and it’s hitting those who can least afford it hardest,” said Damian Sullivan, head of Energy, Equity and Climate Change at the Brotherhood of St Laurence

“On those very hot summer days, we know some older people in poor health who need cooling will go without it, just so they can afford to pay their bills. This risks their health and wellbeing. Winter is the same with too many households forgoing heating to pay their bills.”

The research found low-income households spend around 6.4% of their income on energy (up from 5.9% in 2008), with a quarter spending 8.8%, compared with the highest earning households who spend only 1.5%.

ACOSS and the Brotherhood of St Laurence say policy solutions need to focus not only on reducing energy prices, but also on reducing the size of energy bills and improving capacity to pay for vulnerable households.

Dr Goldie said, “It’s clear urgent action is needed to bring down energy prices, but this won’t be enough for people on low incomes who pay disproportionately more of their income on energy and have less choice and control over their energy. More help is needed.

“Governments must immediately increase the woefully inadequate Newstart Allowance, mandate energy efficiency standards in rental properties, and improve energy concessions.”

The research was conducted by Associate Professor Ben Philips, Centre for Social Research and Methods, Australian National University.

Read the report