The costs that are crippling many Australians

Medical and hospital costs almost treble over 20 years.

poor retiree

Medical and hospital costs have almost trebled in the past 20 years, according to a new report from Fidelity International that tracks living costs since the turn of the century.

With private health insurance set to rise again within weeks, ramping up the stress on annual budgets, the data shows why more and more households are struggling.

Living cost indexes (LCI) are published quarterly by the Australian Bureau of Statistics (ABS) and track a typical basket of goods and services. The reports usually show small increases – rarely drops – but when viewed over a longer timeframe, the key pressure points are stark.

The Reserve Bank of Australia (RBA) calculates that a ‘typical basket of goods and services’ valued at $200 in 2000 had soared by 61 per cent to $322 by the end of last year. The average annual inflation rate during that time was 2.5 per cent.

The Fidelity International report found that medical and hospital costs rose 195 per cent between 2000 and 2019, housing rose 94 per cent and essential living costs 62 per cent. Discretionary spending, such as on international travel, entertainment and clothes, had dropped.

Chris Powell, managing director of Integrity Life insurance, told The Age and the Sydney Morning Herald the hike meant many households were trying to cut corners to save money by forgoing emergency protection products such as health, life and total and permanent disability insurance.

He said the price of insurance generally had jumped about 118 per cent and that 45 per cent of Australians said they did not have insurance in place to meet the cost of a personal disaster.

“The overall rising cost of living means they are less likely to have the very products, such as health insurance, that can help to pay those bills,” Mr Powell said.

And with private health insurance costs to rise by an average 2.92 per cent from 1 April – and by as much as 5.6 per cent – there is no relief in sight.

In YourLifeChoices’ 2019 Retirement Matters Survey, the almost 5000 respondents were asked what were the biggest drains on their savings. Almost 53 per cent said healthcare was a major problem.

In the December 2019 quarter, the ABS reported that the living costs of pensioner and beneficiary households rose 0.7 per cent. Over the same period, the living costs of other government transfer recipient households rose 0.9 per cent, age pensioner and self-funded retiree households rose 0.5 per cent and employee households rose 0.4 per cent.

The most significant price rises in the December 2019 quarter were tobacco (+8.4 per cent), domestic holidays, travel and accommodation (+7.3 per cent), automotive fuel (+4.4 per cent) and fruit (+6.8 per cent).

The most significant price falls were international holidays, travel and accommodation (-2.9 per cent) and women's garments (-2.5 per cent).

ABS chief economist Bruce Hockman said: “Drought conditions are impacting prices for a range of food products. Food prices increased 1.3 per cent this quarter with price rises for beef and veal (+2.9 per cent), pork (+4.7 per cent), milk (+1.7 per cent) and cheese (+2.4 per cent). Both the impact from the drought and lower seasonal supply contributed to price rises for fruit (+6.8 per cent) this quarter.

“Annual inflation remains subdued partly due to some price falls for housing-related expenses. Through the year to the December 2019 quarter, price falls were recorded for utilities (-1.0 per cent) and new dwelling purchases by owner-occupiers (-0.1 per cent), while rent price rises remained modest (+0.2 per cent).”

Does the data trend over 20 years explain why your income is not stretching as far as it once did?

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    COMMENTS

    To make a comment, please register or login
    Karen
    27th Feb 2020
    11:06am
    It saddens me deeply that the cost of private schooling is such an impact....

    You want childcare - you got it... the piper must be paid one way or the other, and adherence to the twin follies of encouraging house hoarding as opposed to home ownership in a competitive market while flooding that market with huge numbers of prospective buyers, was always doomed to create runaway prices.

    For many home ownership is like chasing a mirage...
    mogo51
    27th Feb 2020
    11:14am
    As a pensioner the cost of food, rent, electricity etc continues to rise far greater than does the pension. CPI is a load of bollocks, much higher in reality.
    Jem
    27th Feb 2020
    11:28am
    Dead right....totally unrealistic......and there’s nothing we can do about it....
    Karen
    27th Feb 2020
    11:39am
    We need a new style of government, one that actually works for the people and not for vested interests.
    Mac
    27th Feb 2020
    11:49am
    When did the price of utilities fall?

    "Through the year to the December 2019 quarter, price falls were recorded for utilities (-1.0 per cent)"

    This price fall is not reflected in my bills despite shopping around for the best deal.

    Luckily I save for health insurance regularly during the year so when the increased bill arrives this year I have enough to pay it but with increasing council rates, utilities prices and other cost of living expenses it is getting considerably harder to save anything for maintenance and necessary replacement items.

    Agree that CPI figures do not seem to reflect reality.
    Arvo
    27th Feb 2020
    1:27pm
    You are correct mogo51...CPI is a load of misleading and incorrect statistics manipulated by the Coalition government so it doesn't have to increase bi-annually the old age pensions by more than meager $6 per fortnight. Under Labor government the bi-annual pension increase adjustment was double that until Abbott stuffed it up.Interestingly, when Shorten got the opposition leadership he too did not support age pension increases.
    Aussiefrog
    27th Feb 2020
    3:40pm
    Absolutely agree
    One's just need to do the shopping and fill up the car to see that their CPI figures are way off!
    inextratime
    27th Feb 2020
    11:19am
    In a free market society, why is home ownership influenced by government intervention with tax deduction incentives ?? Do not trot out the old reasoning that the investment allowance creates the incentive for builders to build houses. In a market place where the demand is created by the need for a roof over ones head, builders will build and banks will lend according to market influences as per every other civilised western society. But the rich get richer and the rest can do whatever they like. Just check out the number of investment properties owned by politicians.
    Karen
    27th Feb 2020
    11:46am
    Every viable society is a mix of socialism and free market - how is it that on the one hand any government 'assistance' with home buying is 'intervention' but that government policies of constantly bringing in more citizens and permitting free range for non-Australian buyers while establishing rules that permit repeat building hoarding, are not Intervention?

    Those last are certainly not free market when they are governed by government policy.

    The unfortunate truth is that all government 'initiatives' are causing rises in housing costs.

    The current approach creates the incentive for building hoarders as opposed to home owners, and with far too easy lending to building hoarders compared to home owners on some rather strange concepts of 'equity' (meaning they'll loan to a hoarder on the basis of anticipated equity rise rather than actual equity, thus exposing the market to disaster in the event of any serious economic downturn), prospective home owners are slowly being squeezed out of the market.

    Hardly free market when policies exclude certain groups while including others.
    Triss
    27th Feb 2020
    3:45pm
    You're right, Inextratime. Canberra’s 226 MPs and senators own 524 properties between them, perhaps they should be forced to sell them to give young families a chance to buy their own homes.
    taylah
    27th Feb 2020
    11:40pm
    Dont forget there is the new home owners reduction in stamp duty and the gov grant, works both ways.
    KB
    27th Feb 2020
    11:40am
    Rising cost of health insurance which is an essential for me
    KB
    27th Feb 2020
    11:40am
    Rising cost of health insurance which is an essential for me
    Laura52
    27th Feb 2020
    11:45am
    My elderly parents and I live week to week....spending money only on essentials, food, petrol, medications and bills. No such thing as a disposable income in our household, smashed avos for brunch and holidays....we are home bodies.
    Dancer
    27th Feb 2020
    12:09pm
    For some months I have been lobbying Federal Ministers - writing letters - regarding the inequity between the actual real cost of living rises compared with the age pension increases we get. In particular I have drawn attention to the cost of private health insurance which is a necessity as we age unless we want to languish waiting for treatment from over-crowded hospital waiting lists.
    One point I have been arguing is that the government rebate for private health insurance has been steadily falling over the past 8 years or so. That decrease coupled with the increases for private health insurance premiums makes health insurance even less affordable!
    My suggestion is that everyone writes to their local federal minister and the federal health minister and minister for social welfare and point this out - tell them how we are all struggling to manage a decent standard of living and maintain our health insurance, the latter being for the benefit of everyone because it saves the government money in the long term.
    Franky
    27th Feb 2020
    1:37pm
    My main concern is the projected rise in the cost of food, a basic that everyone needs! The misguided policy of lowering interest rates has cut into investment returns for retirees and lowered the value of the A$ against our trading partners. This will result in rising prices of everything which is imported, and that is most of our food!
    Laura52
    27th Feb 2020
    2:43pm
    I so agree Franky...and local fresh foods such as veggies, fruits are expensive...more tax she be put on fake junk food, alcohol...not real nutritious food!
    Mariner
    27th Feb 2020
    3:31pm
    We buy snap frozen vegetables from Coles like Beans $2 a kg, winter vegetables $3 etc. Really affordable. Do not put an more taxes on my drinks, they already are the dearest outside Scandinavia. I demand more than just vegies at my age!
    Laura52
    27th Feb 2020
    3:40pm
    I also buy the frozen veggies, and are even of better quality, fresher! And supermarket frozen veggies are such good value:)
    Farside
    1st Mar 2020
    12:30pm
    an artificially high interest rate will push up the dollar making our exports more expensive and put exporting industries under the pump - mining, agriculture, education, which will reduce GDP and so adversely affect our sovereign credit rating, wealthy will spend more money overseas and fewer tourists will kill tourism sector, expensive exports and cheaper imports combine to making local businesses less competitive which inevitably leads to business failure and layoffs, company and personal tax receipts fall while welfare and bailouts increase creating a double whammy for the budget and so on.

    Australia exports about 65% of agricultural produce and is a net exporter of food. It still imports many day to day processed foods.

    Be careful what you wish for.
    Tarlo
    27th Feb 2020
    4:18pm
    I agree with you Mariner. Don't tax my drinks more. Frozen peas are great. We are pensioners, and find housing and groceries have gone up lots. Electricity, water, rates and car rego go higher go higher and higher. In NSW pensioners don't pay rego on one vehicle. Plus vegetables and citrus fruits I grow in our yard with tank water if there is enough rain. I live in QLD.
    Mariner
    27th Feb 2020
    5:15pm
    Live in NSW Tarlo, we were just given $250 towards fuel (over 65 Pensioners) outside Newcastle, Sydney and Woolongong .Grateful for everything we get. Do not fret about electricity, the bill is $3 a day - half a schooner of beer at the local unless you hit Happy Hour. Drink the beer mostly at home now (good drop at ALDI for $9 a six pack). Not available in Qld unless it has changed, used to live there for 25 years.
    Tarlo
    27th Feb 2020
    7:41pm
    If some benefits are given to pensioners eg. Rego and petrol, why is it not given federally? Not just by states?
    Tarlo
    27th Feb 2020
    7:37pm
    Thanks Mariner, but I don't think I can move back to NSW now. I did live my first 39 years of life there. No beer at Aldi here yet. I get by and even brew some of my own beer.
    taylah
    27th Feb 2020
    11:36pm
    Love to know what electricity and gas petrol prices were 20 years ago and the percentage increase-----how come these were not in living cost scale.
    Pamiea
    28th Feb 2020
    11:13pm
    Greed personified. Nothing more
    Argydubbaya
    1st Mar 2020
    5:01pm
    Squashed, so many items of escalating prices not included in this bs report, Council rates among them. Incideous rising of costs like the discount for early payment, council rates & motor registration. This has now become a late fee, usually around $70. My rates are exhorbitant as I supply my own water,sewerage, fire services, street sweeping, mowing of roadside. My rates for a block of 4 hectares around $2850. Then thare are rules dictated which stop me from (a) removing trees, for cropping. And(b) disallowing a subdivision. The house I live in is well below a standard of suburbia. Of course the place has been valued to stop me getting a pension, "under review" for 6 years! I am only 72 for fx sake, paid rediculous taxes all my life, scrimped and saved for everything I own, never had a new car. Now they want to stop me taking my money out of the bank. We can all sit around whinging about these times but as we are old obviously cant get out there and fight the ever encroaching unaccountable governments. We are no longer being burgled, we are subjected to robbery under alms by our theiving governments. Who is getting the free lunch we are all paying for?


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