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4102.0 - Australian Social Trends, 2006  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 20/07/2006   
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Contents >> Economic Resources >> Household Expenditure Patterns

Household Expenditure Patterns

Decisions about how to divide up household budgets are generally based on the amount of income available and the needs of the household. In 2003–04, households spent, on average, just under half (49%) of their total weekly expenditure on food, housing and transport. This article describes the average expenditure patterns of Australian households in 2003–04. It also examines trends in household spending by examining proportional change in household expenditure on broad groups of goods and services over the past 20 years.

In 2003–04, households spent, on average, just under half (49%) of their total weekly expenditure on food, housing and transport.

People make choices about how to divide up their household budget based on the amount of income they have to spend and their needs. We all need the basic necessities of life such as shelter, food and clothing. But after the basics are covered to some minimum level, expenditure on these and other items is fairly discretionary and so the volume and quality of the goods and services purchased by households is based on economic resources and preferences.

The level and pattern of expenditure differs quite markedly between households, reflecting characteristics such as income, wealth, household composition, household size and location (see Australian Social Trends, 2006, Household expenditure patterns by life cycle).

This article describes the average expenditure patterns of Australian households in 2003–04. It also examines trends in household spending by examining proportional change in household expenditure over the past 20 years.

PATTERNS OF EXPENDITURE

In 2003–04, Australian households spent $893 per week on average on goods and services, an increase from $362 in 1984. While household expenditure increased in absolute dollar terms, spending patterns did not change greatly between 1984 and 2003–04. The three largest broad groups of goods and services expenditure (i.e. food and non-alcoholic beverages, current housing costs and transport) accounted for 49% of total goods and services spending in both 1984 and 2003–04.


AVERAGE WEEKLY HOUSEHOLD EXPENDITURE ON GOODS AND SERVICES — 2003-04
GRAPH: AVERAGE WEEKLY HOUSEHOLD EXPENDITURE ON GOODS AND SERVICES — 2003-04


Data source and definitions

Most of the data in this article are from ABS Household Expenditure Surveys conducted between 1984 and 2003–04. While there are differences between these surveys which prevent precise measurement of the magnitude of change over time, it is possible to analyse broad changes in expenditure over time.

A household is one or more persons, at least one of whom is at least 15 years of age, usually resident in the same private dwelling.

Expenditure is the cost of goods and services acquired during the survey reference period for private use, whether or not the goods were paid for or consumed. It is reduced by refunds received or expected.

Current housing costs relate only to the dwelling in which the household usually lives, and refer to costs such as rent, mortgage interest, body corporate levies, insurance, repairs and maintenance. The principal component of a mortgage repayment is excluded.

Mean gross household income per week is regular cash receipts before income tax and the Medicare levy have been deducted. It is calculated by dividing the aggregate income of a group of households by the number of households in
that group.

FOOD AND NON-ALCOHOLIC BEVERAGES

In 2003–04, households spent an average of $153 per week on food and non-alcoholic beverages. This represented 17% of total average goods and services expenditure.

Expenditure on meals out and fast food was the highest single component of this broad expenditure group, with households spending on average $42 on such food per week. There was some variation across households with those in the highest income quintile spending $84 per week on meals out and fast foods, or nearly 6.5 times more than the $13 spent by households in the lowest income quintile. Other major items of expenditure on food were meat ($20 per week on average), bakery products, flour and cereals ($16), non-alcoholic beverages ($12), dairy products ($11), fruit and nuts ($10)
and vegetables ($11).

CURRENT HOUSING COSTS

In 2003–04, average household expenditure on current housing costs was $ 144 per week, or 16% of total expenditure on goods and services per week.

Housing costs and components of these costs are different for households with different types of tenure. Households who own their own home with a mortgage had housing costs in 2003–04 of $208 per week on average. The interest component of their mortgage repayment was the largest component of these costs, at $131 per week, followed by repairs and maintenance of the dwelling ($31 per week) and rate
payments ($27).

EXPENDITURE(a) ON CURRENT HOUSING COSTS - 2003-04

Owners with a mortgage
Renters

$
$

Rent
. .
168.55
Mortgage repayments - interest component
131.25
. .
Rate payments
27.01
1.01
House and contents insurance
11.06
2.09
Repairs and maintenance
31.95
3.00
Other
8.01
. .
Average weekly household expenditure on current housing costs(b)
207.92
174.74

(a) Average weekly household expenditure.
(b) Selected dwelling.

Source: 2003–04 Household Expenditure Survey, Australia: Detailed Expenditure Items (ABS cat. no. 6535.0.55.001).


EXPENDITURE(a) ON FOOD AND NON-ALCOHOLIC BEVERAGES - 2003-04

$

Bakery products, flour and cereals
16.06
Meat (excludes fish and seafood)
20.01
Fish and seafood
3.85
Dairy products
11.27
Fruit and nuts
9.77
Vegetables
10.61
Non-alcoholic beverages
12.53
Meals out and fast foods
42.10
Other
26.67
Average weekly household expenditure on food and non-alcoholic beverages
152.87

(a) Average weekly household expenditure.

Source: 2003–04 Household Expenditure Survey, Australia: Detailed Expenditure Items (ABS cat. no. 6535.0.55.001).

For renter households, average housing costs were lower than for owners with a mortgage. Households that were renting spent an average of $175 per week on their housing costs, the great majority of which was their rent payment of $169 per week on average.

TRANSPORT

In 2003–04, households spent $139 per week on average on transport, or 16% of household expenditure on goods and services.

There are a range of costs associated with running a car, including purchase of the vehicle, fuel, registration and insurance, and servicing costs. In 2003–04 these costs averaged $133 per week which is most of the total weekly expenditure on transport. Public transport fares averaged across all households were $4 per week, while households paid $3 per week on average on other fares such
as taxis.

EXPENDITURE(a) ON TRANSPORT COSTS - 2003-04

$

Motor vehicle purchase
49.47
Motor vehicle fuel
32.28
Vehicle registration and insurance
24.77
Vehicle charges (includes servicing)
18.56
Public transport fares
3.91
Fare and freight charges (includes taxis)
2.58
Other
7.68
Average weekly household expenditure on transport
139.25

(a) Average weekly household expenditure.

Source: 2003–04 Household Expenditure Survey, Australia: Detailed Expenditure Items (ABS cat. no. 6535.0.55.001).

OTHER BROAD EXPENDITURE GROUPS

In 2003–04, over half (51%) of household expenditure per week went on a wide range of goods and services other than food, housing and transport.

Average weekly spending on recreation by households was $115 in 2003–04. Recreation was the fourth largest broad expenditure group in that year and represented 13% of total household expenditure on goods and services. The main components of recreation expenditure were equipment including audio-visual equipment, newspapers and books ($42 per week on average), holidays ($35, of which $21 was for holidays in Australia) and a range of services such as cinemas, gambling and Internet services ($29).

Households purchase a wide range of household services such as pest control, gardening, private rubbish removal, housekeeping, cleaning, home help, ironing, security and child care. In 2003–04 households spent an average of $54 per week on these types of household services and operations. Averaged over all households, spending on child care services was $5 per week. However, for households using child care, spending on these services was $47 per week on average.

Households also spent an average of $80 per week on miscellaneous goods and services in 2003–04. Most (82%) of the expenditure in this broad group was on services such as interest on credit services ($18), and education fees ($18).

In 2003–04, households spent an average of $52 per week on household furnishings and equipment. The main items of expenditure in this broad group were furniture and floor coverings ($21 per week), household appliances ($12 per week) and blankets, household linen and household
furnishings ($7).

Households spent $46 per week on average on medical care and health expenses. These expenses accounted for 2% of average weekly expenditure for households with a reference person aged 15–24 years, and this proportion increased with age to 8% of average weekly expenditure of households with a reference person aged 65 years and older. Accident and health insurance cost households on average $18 per week. Health practitioners' fees cost households $14 per week on average, including $6 per week on dental fees. Average household spending on medicines, pharmaceutical products and therapeutic appliances was $12 per week.

In 2003–04, households spent $35 per week on average on clothing and footwear. Like household spending on food and non-alcoholic beverages, household spending on clothing and footwear is largely determined by the number of people in the household as there are little economies of scale in this area of spending. Spending on clothing and footwear is also related to the age of household members. In 2003–04, on average, people aged 65 years and over who lived alone spent around half as much per week on clothing and footwear as people aged under 35 years who lived alone ($10 compared with $19).

Reported weekly spending on alcoholic beverages and tobacco products averaged $35 per household in 2003–04. However, it is known that expenditure on both alcoholic beverages and tobacco products is under reported in the ABS Household Expenditure Survey. Spending on alcoholic beverages and tobacco products tends to diminish as people grow older. In 2003–04, among people living alone, those aged 65 years or older spent considerably less per week on average on these items ($9 or 2% of total goods and services spending) than those aged under 35 years ($32 or 5%).

Household spending on domestic fuel and power averaged $24 per week in 2003–04. Most of this expenditure was for electricity ($17) and mains gas ($5). For recent trends on household energy use (see Australian Social Trends 2006, Environmental impact of household energy use).

Personal care items are a relatively small component of household spending, with an average of $17 per household per week spent on these items in 2003–04, comprising $10 on toiletries and cosmetics and $7 on personal care services such as haircutting.

CHANGE IN PROPORTIONAL SPENDING

Between 1984 and 2003–04, household expenditure increased by 147%, from $362 to $893 per week on average. The proportional increase in household expenditure closely matched the increase in household income as mean gross household income increased by 148% over the same 20 year period.

The All groups Consumer Price Index (CPI) rose by 117% between 1984 and 2003–04. As price inflation averaged across all consumer goods and services purchased by households increased at a much lower rate than both household expenditure and household income over this period, this suggests that households have generally improved important aspects of their material wellbeing over the past 20 years.

Overall, household spending patterns were fairly similar between 1984 and 2003–04. There was no directionally consistent change in the importance to household budgets of a number of broad groups of goods and services, while proportional spending on other broad groups trended slightly higher or lower.

INCREASING SHARE

Proportional spending on current housing costs increased 3 percentage points between 1984 and 2003–04, from 13% of total spending on goods and services in 1984 to 16% in 2003–04. The percentage point increase in housing costs was greater than increases in any other broad expenditure group.

HOUSEHOLD EXPENDITURE ON BROAD GROUPS OF GOODS AND SERVICES

Average weekly household expenditure in 2003–04
Change in proportional spending
between 1984 and 2003–04

$
%
percentage points

Food and non-alcoholic beverages
152.87
17.1
-2.6
Current housing costs(a)
143.50
16.1
3.2
Transport
139.25
15.6
-0.7
Recreation
114.68
12.8
0.9
Miscellaneous goods and services
79.59
8.9
1.7
Household services and operation
54.24
6.1
1.7
Household furnishings and equipment
52.00
5.8
-1.8
Medical care and health expenses
45.78
5.1
1.2
Alcoholic beverages and tobacco products
34.87
3.9
-1.1
Clothing and footwear
35.26
4.0
-2.5
Domestic fuel and power
23.59
2.6
-0.3
Personal care
17.20
1.9
0.1
Total goods and services expenditure
892.83
100.0
0.0

(a) Only for the dwelling selected in the survey (i.e. only for the dwelling in which the household resides).

Source: 2003–04 Household Expenditure Survey, Australia: Summary of Results
(ABS cat. no. 6530.0 Reissue).

Proportional expenditure analysis

While it is possible to examine changes in spending in conjunction with changes in prices to determine how the volume of goods and services purchased by households has changed over time, this article presents a simple analysis of changes in proportional spending on broad expenditure groups. Change in proportional spending indicates which areas of spending are of growing or declining importance in household budgets and purchasing decisions. Proportional analysis does not measure change in levels of consumption, and proportional change to one broad group impacts every other group.

Contributing to this increase has been the trend towards smaller households (see Australian Social Trends 1998, Smaller households, larger dwellings, pp. 157–159). In 2003–04, people living alone accounted for 25% of all households, up from 19% in 1984. Lacking the economy of scale derived from sharing current housing costs with other income recipients, lone person households had relatively high proportional spending on current housing costs in both 1984 (18%) and 2003–04 (23%).

Spending on many services increased between 1984 and 2003–04. Proportional expenditure on household services and operations as well as miscellaneous goods and services increased by almost 2 percentage points over this period. Expenditure on medical care and health expenses increased by 1.2 percentage points, which was the fourth largest increase in percentage point terms over the period.

DECREASING SHARE

The four broad expenditure groups that decreased in their share of total goods and services expenditure by more than one percentage point between 1984 and 2003–04 were predominantly goods rather
than services.

Spending on food and non-alcoholic beverages, and clothing and footwear, fell by the greatest number of percentage points compared with all other broad groups, with both groups falling by about 2.5 percentage points over the period. Proportional spending on food decreased from 20% in 1984 to 17% in 2003–04 and clothing and footwear from 6% to 4%. Expenditure on household furnishings and equipment fell by almost 2 percentage points, from 8% in 1984 to 6% in 2003–04.



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