This week we had the release of the Budget. There were no real surprises in it as most of the details had been 'leaked' over the past month and nobody was under any illusion that it would have nice bonuses and tax breaks in it. It didn't really have many increases in taxation either though so in the overall picture what we ended up with was more of the same.
What is worth noting however, is the few details that the media have latched onto and run with. Most notably the perception that $150'000 per household would now put families in the class of the working poor. It's amazing to think that we may have reached the point here in Australia that our costs of living have shot upward so high that we are creating unliveable situations for the bulk of our country.
If we look at it realistically, we have most of our population under the $150'000 per household mark. In fact, most regions are well below that. Around 20 percent of our total population are living in households with more than $150'000 so that leaves a massive part of our population in dire straits, if you are inclined to believe Today Tonight, A Current Affair and the Murdoch press.
Of the remaining 80 percent how many do you suppose are living on around $50'000 per household? Quite a large chunk actually. Hence the rental crisis around the country as more and more families are priced out of the housing market. According to Gavin King's research (I know, I never thought I'd quote anything from him either), the average household income in Cairns is $80'000. As an average that doesn't sound too bad but if we take into account the 15 percent who are on quite high incomes, the bulk of Cairns residents are more than likely hovering around $60'000 per household. It's not a lot of money is it.
Then we have those earning $150'000 who are announcing to the general population that it's damn hard to live on that paltry amount these days. Makes it kind of tough for the rest of us to continue trying to reach that status if getting there will only mean we are still struggling, just in a nicer house.
Gavin is also correct in his assertion (I know, it surprised me too) that we are spending more and more on 'things' that we really don't need. Nobody needs more than one TV per house, or more than one bathroom, or a media room, or an entire bedroom per child, or two lounge rooms, or a formal and non-formal dining room, or any number of added 'necessities' that once upon a time, around 20 years ago, were luxuries that not many could afford. We have created monster sized spaces inside our homes, at the expense of the size of our backyard, and wonder why we are overweight, our kids can't socialise and small mindedness is rampant? That's what happens when you build yourself a beautiful cage.
Money is subjective. If you have none, getting it becomes the primary purpose of your life. If you have plenty, it's still not enough and the ways and means of getting more continue to rule your days. How much is enough? I'm not sure.
In my opinion we should have the capacity to earn enough to buy our own home and it needn't be of showroom quality. We should be able to afford childcare for our children if we choose to return to work. There must be enough in the bank each week for fresh food so that our families eat well and petrol for us to get to work and pick up our kids. We need to have enough for our utilities, rates and insurance fees and enough to adequately clothe our families. Apart from that, a little bit extra to put into a savings account for a yearly holiday would be a nice bonus for all of us.
So, how much would all of that cost? Well, I took a few averages and added them up. Let's start with the home. A 3 bedroom home without an office, ensuite, pool or other luxury add-on is averaging $300'000 in the Cairns region. Current interest rates puts the repayments of this at around the $570 p/w mark. Rates on that property will be about $55 per week.
Next, childcare. An average childcare facility in this region will set you back approximately $75 per day. Over one week that equates to $375.
Fresh food is an expensive option these days but a shop at Rusty's, the Farmers Markets or the market stall at Stockland will cost you around $70 for a weeks worth and then we add the same amount for meat and an extra $50 for pantry items and toiletries........total spend for one week is $190.
Petrol if you work close to home could be as low as $25 per week but for the bulk of us it would be a minimum expense of $40 and that's provided you don't use the car to 'duck' down to the shops at any point.
So, what's next? Utilities. Well, average household (I am using the standard, 2 adults and 2 children scenario for each household) cost is $400 per quarter, this figure is only relevant if you have no air-conditioning, dishwasher, dryer or second TV. Broken down that makes it about $35 per week. Water.....$8 per week. Phone bills with one mobile and one landline will equate to close to $25 per week on the cheapest rate available. We will consider internet a luxury in this instance and not count that cost. Obviously gas and solar would change those numbers but lets face it, they are still luxury items so most 'average' households don't have them.
Next we deal with insurance. If I am honest on this subject, most households are severely under-insured so the average is actually only $250 per month. What it should be, for home, contents, life, health and income protection or trauma cover is $600 per month. I'm not making that up, scary isn't it. So we have a weekly amount of $125.
Clothing per week we will make up and say it's around the $20 mark. Provided we shop at sales and op-shops and make do with 2 pairs of shoes each. This figure is very low and would not allow for uniforms or any growth spurts for children.
And lastly, a small amount to put away each week. Let's say for arguments sake a holiday a year in Australia for a family for an entire week costs $3'000......that would make a payment into your savings account of $60 per week.
Now add it all up......$570 + $55 + $375 + $190 + $40 + $35 + $8 + $25 + $125 + $20 + $60 = $1'503 per week. After tax. I am not even going to look that one up to see what it would equate to as a yearly wage because I am pretty sure it would be close to the magical $150'000 mark. Damn. And to think I never even counted costs like school, sports, swimming lessons, dvd hire, take-aways, lunches and dinners out at restaurants, haircuts, coffee catch-ups etc........
Apparently, we are all living beyond our means, no wonder credit card debt is so high. And this entire process was based on averages for the most basic of situations. Even removing the extra costs I added for insurance and the savings account would not help enough.
I don't know if the whining by the $150'000 households is acceptable when there are families living on far less than that without complaint. The top level of income whereby allowances and rebates peter off has been that same figure for a long while and it was never an issue before.
Perhaps we can conclude that those living on less are really struggling to get the basic necessities in life while those on higher incomes are also struggling because they have the opinion that at their level of income they should be able to afford MORE than what is necessary. What we should have ended up with is a group of people living well on what they have but instead we have ended up with two groups of people who are facing bankruptcy because the standards of living they have set for themselves are equally as unobtainable.
I will end with an article from the ABC released after the budget announcements that I found relevant to this post. Here it is:
From the ABC Sunday 15th May, 2011: New research released today into people's attitudes to wealth has concluded that Australians suffer from an illusion of equality.
The survey of 1,000 Australians found wealth inequality - where 20 per cent of people own more than 60 per cent of Australia's wealth - is dramatically underestimated.
The Australian Council of Trade Unions commissioned the research on attitudes to inequality and the minimum wage in the lead-up to Monday's hearing of the national minimum wage case.
ACTU secretary Jeff Lawrence says respondents believe Australia is far more equal than reality suggests.
"Australians actually think that Australia's society is more equal than what it actually is and they think that it should be more equal," he said.
Curiously wealthy people underestimated their value and poorer people overestimated theirs.
Mr Lawrence says respondents also believed the basic wage was higher than the actual base rate of $15 per hour.
"Liberal voters overestimate the minimum wage by the largest margin, about $2.22 an hour," he said.
"If you look at the total sample, 83 per cent supported raising the minimum wage with only 5 per cent being opposed."