Fair access for all
Anglicare has released a new research report after investigating the experience of low income Tasmanians faced with rising costs for essential goods and services.
Tasmanian Anglican asked researcher Jo Flanagan about the findings of the report The price of poverty: the cost of living for low income earners.
Do Tasmanians have fair access to essential goods and services?
No. We found that people on low incomes pay relatively more for essentials like electricity, housing, food and telecommunications. The risk is even higher if they live in an area that doesn't have good transport services and other infrastructure. We call it the poverty penalty.
Why is it that people on low incomes pay relatively more for food?
It is hard to shop around for the best price if there are restraints on income and transport. We found some people pay more because they shop at small, local outlets which have higher priced food. They also face higher costs because they need to shop in small quantities. They can't afford to buy in bulk. We found many Tasmanians buy cheaper, less nutritious foods that are filling but not as healthy. For example a lot of people said they rarely eat fresh fruit. A less nutritious diet means they are at greater risk of health problems.
Do people on low incomes pay more for housing?
People on low incomes spend a much larger proportion of their income on housing than those with higher incomes. The need for cheap housing means people end up renting or buying houses further away from services and infrastructure. Cheaper housing is often poor quality and has problems with cold and damp, increasing the likelihood of higher electricity and health costs. Some people can't afford home or contents insurance.
What about electricity?
Relative to their income, low income Tasmanians spend more on electricity than people on higher incomes. Bills are often higher because of poor quality housing and inefficient appliances. Many people ration electricity because they can't afford the amount they really need.
People using APAYG meters receive a lower standard of customer service, particularly in relation to disconnection, and therefore get less value for their money. The amount people spend on electricity is fairly inflexible as most households don't have much capacity to reduce their consumption.
Do poor Tasmanians pay more to stay connected?
A lot of people rely on the more expensive pre-payment options for phones because it allows them to control the expenditure. Poor access to public telephones means people need to have mobile phones, even if they can't afford them. It can be difficult for people to ration phone credit effectively because in some cases anything ‘saved' has to be forfeited at the end of the credit period.
If people are budgeting properly, how can they not have enough for basics?
The main issue is that many people don't have adequate incomes. One in three Tasmanians rely on income support payments as their main source of income. These payments are not linked to basic living costs. So even with the most stringent budgeting efforts, people run out of money to pay for essentials. People tend to pay their housing and electricity costs, then ration things like food or heating.
Your report talks about a ‘catastrophic spending burden'. What is this?
This is a term usually seen in research about poverty in developing countries. Spending is defined as ‘catastrophic' when payments are in excess of a critical threshold share of the household budget. When a service is a necessity, a low income household must do something extreme to be able to purchase it. That's what we're now seeing here in Tasmania as people struggle to afford essential goods and services.
What are the solutions?
The Australian Government needs to set income support payments at a level that allows for an acceptable minimum standard of living for all recipients. The payments must be indexed to prices and wages. Reform of social security income tests are also required to support people to engage in part-time and casual work. At the moment, people doing this type of work face high marginal tax rates.
What other measures would help to make sure there was fair access to essentials?
Our report has 18 recommendations to improve the various systems so that people on low incomes are not penalised. If implemented, these would help to improve access to essential goods and services and also provide greater consumer protection for everybody.
Why should people care about this issue?
It's about fairness. The prices of essential goods and services are so high that there are people on low incomes having to do something extreme to pay for them - such as missing out on food or living for periods without lights, heating or hot water. These experiences are relatively common now in Tasmania. We are not talking about luxury items - these are the essentials that all of us need.
Emergency relief is important but it won't solve the problem. There are structural changes that need to be made. People with a sense of justice and a belief in fairness can tell governments that the status quo is unacceptable. No-one should be missing out on basics or paying a penalty because they're on a low income.
Further information visit Anglicare or Freecall 1800 243 232
Story and photos Bronwen Hayes, Anglicare