How Australians are faring

A unique snapshot of Australians reveals a country where incomes are stabilising, poverty is declining, rates of financial stress are down and we are more educated than ever - especially women.

But amid the good news, the annual Household, Income and Labour Dynamics in Australia (HILDA) Survey of 17,000 people points to intergenerational tensions. It shows younger people are being disproportionally hit by rising underemployment and high house prices that are keeping them renting for longer.

And there is rising inequality among older Australians as self-funded retirees do well out of tax concessions, leaving behind those on the pension.

The challenge of single parent families

On the home front, single parent families are our most vulnerable, coming out bottom on a host of measures ranging from poverty and income, to financial and housing stress.

And there are signs of emerging domestic tensions between men and women with increasingly progressive attitudes toward gender roles failing to translate into practice, with women still lumbered with the bulk of childcare and housework.

“On broad measures HILDA shows that as a society we are doing well, but it also highlights where the problems are and where we probably need more policy work,” says survey leader and University of Melbourne economist Professor Roger Wilkins.

“The fact that many single parent families consistently do so badly is a particular worry given children and their future prospects are at stake.

“The data suggests that we aren’t getting the policy balance right in terms of supporting and encouraging single parents to be able to work. One obvious option is to provide single parents with free child care,” he says.

“Stress over housing costs is down, but that is largely a function of our low interest rates keeping a lid on the cost of the large mortgages many households have.

“The stress people are facing now is actually getting into what is an expensive housing market, and housing stress is worse among renters.”

Intergenerational inequality

One of the policy implications of HILDA, says Professor Wilkins, is the need to address the generational inequities the data highlights.

“The inequality we are seeing among retirees probably reflects the generous tax treatment that self-funded retirees have enjoyed and which I think has been over the top,” says Professor Wilkins.

“In terms of generational equity, it doesn’t strike me as fair when you have younger people coming through facing higher house prices, and larger student debts because they need be more qualified to progress in a labour market that is less receptive to new entrants than what it was.”

HILDA shows that underemployment, which is now running at 8.3 per cent, disproportionately weighs on the young. Among HILDA participants aged 15-29, over 18 per cent report being underemployed, defined as having part-time work but wanting to work more hours.

“We need to be thinking about perhaps taxing self-funded retirees a little more and reducing taxes on low income earners, who are disproportionately younger,” says Professor Wilkins.

A snapshot of australia

Compiled by the Melbourne Institute, Applied Economic and Social Research at the University of Melbourne, HILDA is a longitudinal study of the economic and social wellbeing of Australians going back to 2001. The latest analysis of the 2016 survey shows that:

• Median household income rose 1.8 per cent in 2016 to $79,244, little changed from 2009.

• Child poverty is averaging 7.6 per cent, down from 12 per cent in 2001, but children in single parent families are almost three times more likely to be in poverty than children in coupled families.

• About 32 per cent of people had a household member receive a welfare payment during 2016, little changed since 2009.

• The proportion of renters moving into home ownership from one year to the next dropped to 10 per cent during 2013-16, down from almost 14 per cent during 2001-04. The fall was sharpest among 18 to 24 and 35 to 44-year-olds.

• The proportion of people under stress from housing costs (mortgages and rents) fell to 9.6 per cent in 2016, down from 11.2 per cent in 2012. But housing stress is higher among renters at 20 per cent. A household is said to be under housing stress if income in the bottom 40 per cent of households and mortgage/rental costs exceed 30 per cent of income.

• Among 25 to 34-year-olds the proportion of women with a bachelor degree or higher qualification has soared to 44 per cent from 28 per cent in 2001, compared with a rise among men from 26 per cent to 31 per cent.

• Women work harder than men at 56 hours a week (25 hours in paid work, 20 hours on housework, 11 hours on care), compared with 53.4 hours for men (36 hours in paid work, 13.4 hours on housework, 5.4 hours on care).

Living with poverty

Relative poverty, defined as earning less that 50 per cent of median household income, has fallen to 9.4 per cent from 13 per cent in 2007.

More stark has been the fall in the “anchored” poverty rate which is based on a constant real income, showing the proportion of people with less than 50 per cent of the 2001 median household income.

Anchored poverty rates have steadily dropped to just 3.6 per cent in 2016, down from 12.6 per cent in the 2001 base year. But in a finding that may be significant for future trends in poverty reduction, for the first time since HILDA started there was a slight uptick in the anchored poverty rate, which had bottomed at 3.4 per cent in 2015.

HILDA shows that over the last ten years, around a quarter of people have experienced some relative poverty for at least a year, but for most poverty was temporary. Only 2.5 per cent of women and 2.1 per cent of men experienced poverty for seven or more years between 2007 and 2016.

The proportion of people who report experiencing financial distress during the year has also generally fallen since 2011:

• People reporting not being able to pay their utility or phone bills on time is down at 11 per cent from 13.4 per cent.

• People not being able to pay their mortgage or rent on time is down at 5.8 per cent from 7 per cent.

• People having to sometimes go without meals is little changed at 3.4 per cent.

But while financial stress may be less prevalent, the HILDA data shows that it is persistent. Just over half of people experiencing some form of financial stress in one year, remain in financial stress the next year.

Single parents are also more likely to suffer financial stress at 29 per cent compared to 11 per cent of coupled families.

Energy cost surprise

One of the surprising findings of HILDA this year is that despite rising power prices household annual spending on energy fell to an average $2,118 in 2015-16, or 2.8 per cent of household income, down from a 2013-14 peak at $2,185.

As a proportion of total household spending, expenditure on energy is at its lowest since 2010.

“It looks like people are modifying their behaviours to reduce their energy costs,” says Professor Wilkins. “This might be efficiency measures like better insulation or installing solar panels, but people are probably also just using less.”

“For low income households this may simply mean rugging up more over winter, which would be a worry if vulnerable elderly people are doing this,” he says.

But the biggest surprise for Professor Wilkins in HILDA, is the same surprise every year – that 17,000 people keep filling out and returning the survey.

“We get a great response rate every time and it is because people feel they are contributing to society by doing it,” says Professor Wilkins.

“It says to me that most people genuinely do think that Australia is worth it, that it is a place to live a productive and fruitful life, and that it is a place where we can do better.”

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