SUMMARY OF FINDINGS
HOUSEHOLD EXPENDITURE ON GOODS AND SERVICES - OVERVIEW
In the 12 months to June 2004, Australian households spent an average of $893 each week on goods and services. This is an increase of 28% since the previous survey which was conducted in 1998-99. Part of this increase can be attributed to inflation - over the five years since the previous survey, the price of goods and services, as measured by the consumer price index (CPI), rose by 18%. Over the same period, the mean gross household income per week increased by 28% and the average household size decreased from 2.60 people to 2.53 people.
In 2003-04 the largest broad categories of household expenditure were:
As in 1998-99, these categories together accounted for around half of household expenditure on goods and services. The next highest category was recreation, with average weekly household expenditure of $115 per week, representing 13% of the total.
- food and non-alcoholic beverages, with average household expenditure of $153 per week, representing 17% of total household expenditure on goods and services
- current housing costs, $144 per week, 16% of the total
- transport, $139 per week, 16% of the total.
AVERAGE WEEKLY HOUSEHOLD EXPENDITURE ON GOODS AND SERVICES
DIFFERENCES BETWEEN HOUSEHOLDS
The level and pattern of expenditure differs between households, reflecting characteristics such as income, wealth, household composition, household size and location.
Gross household Income
In 2003-04, households in the lowest gross income quintile (the lowest 20% of households when ranked according to gross income) spent on average $413 on goods and services per week, compared to $1,499 by households in the highest gross income quintile. This difference in expenditure is partly a consequence of household size: households in the lowest quintile contain on average 1.5 persons, compared to 3.4 persons in households in the highest quintile. Lone person households make up 63% of households in the lowest quintile.
Equivalised disposable household income
Equivalised disposable household income provides an indicator of the relative standard of living of households of different size and composition. The composition of household expenditure differs between equivalised disposable household income quintile groups. For example, food and non-alcoholic beverages accounted for 20% of the expenditure on goods and services of households in the lowest equivalised income quintile, compared to 15% for households in the highest quintile. In general, the proportion spent on domestic fuel and power, tobacco and household services also declined as equivalised disposable income rose, while the proportion spent on recreation, clothing and footwear, alcohol, personal care and miscellaneous goods and services increased.
PROPORTION OF EXPENDITURE ALLOCATED TO GOODS AND SERVICES BY THE LOWEST AND HIGHEST EQUIVALISED INCOME QUINTILE GROUPS
Household net worth
Current housing costs is the broad expenditure group most related to levels of household net worth. Current housing costs comprised 24% of total expenditure on goods and services for households in the lowest net worth quintile but only 11% for households in the highest quintile.
For many households, the dwelling in which they live is the main asset. Households with low net worth are likely to have a high mortgage offsetting the value of the dwelling, or are likely to be renting. They therefore tend to have high housing costs, either in the form of interest payments on their mortgage or in the form of rent. Households with high net worth are more likely to own their own home with only a small or no mortgage outstanding, and therefore only have low housing costs. Only 4.4% of households in the lowest net worth quintile own their own home, compared to 97% in the highest quintile.
Expenditure on medical care and health expenses tends to be substantially higher for households with higher net worth, accounting for 2.6% of expenditure for households in the lowest quintile and 6.7% for households in the highest quintile. In part this may reflect the older ages of persons in the higher quintiles. The average age of the reference person in the lowest net worth quintile is 41 years compared to 55 years for the highest quintile, both quintiles have a household average of 0.6 persons under the age of 18, and the average number of persons 65 years and over is 0.2 in the lowest net worth quintile and 0.4 in the highest quintile.
In general, the proportion spent on recreation, household furnishings and equipment, and clothing and footwear rose as net worth rose, while the proportion spent on tobacco dropped substantially.
PROPORTION OF EXPENDITURE ALLOCATED TO GOODS AND SERVICES BY THE LOWEST AND HIGHEST NET WORTH QUINTILE GROUPS
Social and demographic characteristics
The level and composition of household income and expenditure is highly related to the social and demographic characteristics of household members. For example, households in the lowest equivalised disposable income quintile were more likely to be lone person households and to rely on government pensions and allowances as their principal source of income. Similarly, households in the highest quintile were more likely to be couple, one family households and to have wages and salaries as their principal source of income.
Households in which the levels of weekly expenditure on goods and services was significantly below the average of $893 for all households included:
In contrast, households in which the level of expenditure on goods and services was significantly above the average included:
- households which relied on government pensions and allowances as their major source of income, with average weekly expenditure of $456
- households which rented their dwelling from a state or territory housing authority, with average weekly expenditure of $408
- lone person households, with average weekly expenditure of $485
- households in which the reference person was 65 years and over, with average weekly expenditure of $510.
Household characteristics can also help to explain the variation in the composition of expenditure. For example, housing costs accounted for only 8% of total expenditure on goods and services of those households who owned their home outright; at the other extreme, households renting from private landlords spent 23% of their total expenditure on housing.
- households with principal source of income of wages and salaries, with average weekly expenditure of $1,091
- households purchasing their home (with a mortgage), with average weekly expenditure of $1,148
- couple, one family households with children; for example households consisting of a couple with their dependent and non-dependent children only, had an average weekly expenditure of $1,537
- multiple family households, with average weekly expenditure of $1,395
- households in which the reference person was aged 45 to 54 years, with average weekly expenditure of $1,076.
The level of expenditure varied across states and territories. Households in the Australian Capital Territory recorded the highest average weekly expenditure at $1,064, followed by those in Northern Territory at $1,044. The lowest expenditure was in Tasmania at $759 per week.
Expenditure also varied between capital cities and elsewhere. The average weekly expenditure of households located in capital cities was $947, compared with $798 in areas other than capital cities. The capital cities with the highest average weekly expenditures were Darwin at $1,085 per week, Canberra at $1,064 and Sydney at $1,032. However, the differences between Darwin, Canberra and Sydney are not large enough to be significant at the 95% confidence level (see Appendix 2).
CHANGES SINCE 1998-99
The overall increase in average weekly household expenditure on goods and services between 1998-99 and 2003-04 was $194 or 28%. Over the same period the price of goods and services, as measured by the CPI, rose by 18%.
The broad expenditure categories recording the largest increases in dollar terms in average weekly expenditure were:
At the more detailed expenditure items level (see Household Expenditure Survey, Detailed Items, 2003-04 (cat no. 6535.0.55.001)), some of the most significant spending increases over the 5 year period were on mobile phone charges (up 139%), interest payments on mortgages (up 80%), health practitioners' fees (up 44%), education fees (up 41%), child care (up 34%), health and accident insurance (up 34%), domestic fuel and power (up 32%) and petrol (up 26%).
- Current housing costs (selected dwelling), up $46 (47%), due in part to increased mortgage interest payments, up $20 (78%) and increased rent payments, up $9 (23%)
- recreation, up $26 (29%)
- food and non-alcoholic beverages, up $26 (20%)
- miscellaneous goods and services, up $22 (39%), partly due to increased spending on interest payments on selected credit services (excluding loan payments for selected dwelling), up $9 (88%)
- transport, up $21 (18%), with increases in the purchase of both motor vehicles and petrol (16% and 26% respectively).
INCREASE IN AVERAGE WEEKLY EXPENDITURE ON GOODS AND SERVICES, 1998-99 TO 2003-04