Those relying on the Age Pension and other Centrelink payments pay more for essential goods and services than self-funded retirees and people on higher incomes, according to a report from charity network Anglicare Australia.
The conclusion is that it’s expensive to be poor.
The report reveals that less well-off people end up paying more per item for household essentials than those earning much more.
The main reason is that households with lower incomes don’t have the money, time or other resources needed to buy in bulk or shop around for a better deal.
As a result, low-income people, such as those solely relying on the Age Pension, pay on average 1.5 times more for the same goods and services as more well-off households – an effect being dubbed the ‘poverty premium’.
The report found that people on lower incomes are spending up to 10 per cent more on petrol, up to 20 per cent more on energy and up to a whopping 93 per cent more on groceries.
“People balancing caring responsibilities … rarely have the time to drive to multiple supermarkets to get the best price or call multiple providers to get the best deal,” the report says.
Lower socio-economic areas are also often geographically removed from city centres, and therefore further from shops and services. The result is that less well-off people living in these areas have to pay more in travel costs compared to people living in more connected areas.
Anglicare Australia executive director Kasy Chambers told SBS News that many people were taking on predatory payday loans and other credit products in order to meet basic necessities. Others are simply going without these essentials, skipping meals, missing medical appointments and avoiding taking out insurance policies.
“Our research shows that it costs more to be poor,” she says.
“People pay more because they can’t afford to buy in bulk or to shop around. They pay penalties if they’re forced to live further away from their work and communities. And the best credit deals are for people with high credit scores and healthy bank balances.
“These extra costs are a poverty premium, punishing people who are already earning less.”
What can be done to help pensioners?
With inflation continuing to push up prices, the impact of this inequality will grow. And the pension rate through indexations is slow to catch up.
Age Pension rises, like many government payments, are linked to the Consumer Price Index (CPI) and indexed in March and September. But pensioner advocates say that is simply too slow to reflect changing economic conditions, especially when CPI calculations are done quarterly.
Paul Versteege, policy coordinator for the Combined Pensioners and Superannuants Association (CPSA), wants to see twice-yearly indexations increased to at least four, one for each quarter, if not monthly.
“The reason the pension doesn’t get indexed quarterly and the increase doesn’t come through more quickly is a simple one. It’s cheaper for the government,” he says.
“Timely pension indexation would fix a lot of pensioners’ cost-of-living problems.”
Do you pay more for essential household items because you don’t have the ability to shop around? Are you going without important services? Let us know in the comments section below.