Almost every Australian is feeling the pinch and cutting back on household expenses, research from the National Australia Bank (NAB) reveals. But will the PM’s intervention make any difference?
The NAB Consumer Stress Index for Q4 2023 has risen for the fifth consecutive period, showing Aussie households are still under widespread economic pressure.
The index sits at its highest point since Q1 2020 and is above the survey average for the first time in four years. The data is gathered through customer surveys sent out to NAB customers.
Stress levels over living costs were unchanged in the three months to the end of December, at 69.4 points as inflation continued to ease. Overall, the index rose to 59.9 points, up from 56 points in the previous December quarter.
Why are people stressed?
Job security was chief among people’s concerns, especially as the Reserve Bank of Australia (RBA) is predicting unemployment to rise to more than 4 per cent by the end of 2024.
Concerns about the cost of living, while still quite high, have levelled off as inflation eases.
While consumer prices may be evening out, people are still cutting back on what they deem to be ‘non-essentials’.
Dean Pearson, head of behavioural economics at NAB, told the ABC that more than 50 per cent of survey respondents said they had cancelled or cut back on eating out at restaurants, on entertainment such as going to the movies, and some are using the car less to save on petrol.
“And increasingly we’re asking people: ‘How much is that saving you per month?'” Mr Pearson said.
“And those things alone are saving about $300 a month … so if you translate that over a year that’s $3600 a year.
“They’re very proactive in still trying to manage those offsets and we know that they’re using that money so they can afford … their day-to-day living expenses that are coming through.”
To achieve this, Mr Pearson says people are undertaking what the bank is calling ‘consumption smoothing’ or making deliberate spending trade-offs to manage unexpected expenses. In other words, cutting back on luxuries in order to afford necessities.
Can anything be done?
Prime Minister Anthony Albanese says his government has a number of cost-of living relief options it intends to table at a caucus meeting in Canberra on Wednesday. He said the options have been formulated on the advice of the Treasury.
He has already signalled he would like to make changes to the controversial stage three tax cuts to ensure low- and middle-income earners get a bigger proportion of the proposed cuts.
“What we’ll be looking at, of course, is the advice that we’ve received about how we can take pressure off cost of living for people who are doing it tough without putting pressure on inflation,” Mr Albanese told Sky News.
“We’ve always said that we will continue to look for ways to assist people. If we can find ways to put extra dollars in people’s pockets, particularly those low and middle-income earners who are doing it tough, then we’re prepared to do so.”
But the Opposition has already signalled it will fight any proposed changes to the stage three tax cut proposal.
Shadow treasurer Angus Taylor said his party would “absolutely not” back any changes to the stage three cuts because of the repeated commitments to the policy from both sides of politics over recent election cycles.
“It’s in legislation and Labor voted for it. And it’s been to two elections. So this is not something you change.”
Do you think the government should be doing more on cost of living? Are the stage three tax cuts the right proposal? Let us know in the comments section below.