Is Australia’s high cost of living just an illusion? 141



View Profile

If you were to walk down the street and choose someone at random or sit with four or more people to discuss the cost of living in Australia, it is likely that their comments would indicate serious financial hardship. A new report also lists Australia as the most expensive country to live in. But everything is relative and when you factor in a couple of other things like wage indexation and culture you must ask the question, are Australians crying poor when the high cost of living is just an illusion?

Comments like “fuel is too expensive”, “bills are larger than my income” and those who are doing it tough throw around “some weeks I can’t afford my groceries” regularly. And I agree that they are doing it tough. Things are expensive and some people sadly weren’t privy to the education that covered money, investment and managing finances. But everything is relative and I think that some things need to be considered before we go labelling ourselves as hard done by the cost of living.

Deutsche Bank, in its fourth annual Mapping the World’s Prices report found Australia to be the country with the highest cost of living. This was based on a myriad of factors including transport costs, dining out costs, the cost of a pair of Levi jeans, the cost of beer, the cost of a big mac and the cost of one night in a five star hotel amongst many others. So the data is collected from a wide range of factors.

But there are also some things that we need to remember.

Firstly, you can’t compare apples with oranges. You can only compare apples with apples and on a worldwide scale that becomes very difficult. The report concludes that what an American can buy for US$1 would cost an Australian AU$1.12 by the time the appropriate conversions were done. However, this doesn’t account for the fact that the economy is different, our wage structures are different and our earnings are different.

In Australia, the average annual salary is AU$74,724. In America, the average annual salary is US$50,500 (at the time of writing this it is about AU$64,869.00). There’s a significant discrepancy there. So the different in prices for goods should also be considered as relative based on the percentage of income it costs and when you do that things become a little different. Australian’s only pay 90% of the relative cost of buying a Big Mac in the US making Australia cheaper than the states. Everything is relative once you factor in the earnings of each country.

Then there’s the crux of Australia’s financial problems. It’s the reason that average household debt sat at over $79,000 in 2013 and this is because Australians are lead to live an aspirational life. The “ideal” household has two cars, four mobile phones and two computers, a large house in the suburbs, holidays overseas, pets and regular paid for entertainment like eating out. And unfortunately the line between necessity and luxury is becoming quite blurred.

So the surfacing of reports like this often prompts when we complain about the cost of living in Australia, as, perhaps we should take a moment to think about things with a little perspective.

Are we really hard done by the cost of living in Australia? Or is it our style of living that is the problem?


Share your thoughts in the comments below…

Starts at 60 Writers

The Starts at 60 writers team seek out interesting topics and write them especially for you.

  1. I have no idea what the answer is, alI know is that I am struggling now on a pension and I can see with the cost of everything rising that, that will only get worse with time, things never come down in price..they always rise

    2 REPLY
    • And did you know Leanna that the age pension was introduced in 1909 with it available when you turned 65? Even back then the government was sly as the average life expectancy then was 55 so they counted on not many people needing it. So the average wage doesn’t make sense as the amount they give you for a pension. If the average wage is around $74,000 then the pension should be more, because it cannot keep up with the cost of living which supposedly governs the average wage…..

    • I agree with yo Leanna the pension is a problem but this is the government most people voted in, today you need about $ 1000.00/week to leave reasonable, and pensioners get $ 500.00 a fortnight, a shame

  2. There are a lot of people earning well below the average wage.

    5 REPLY
    • We had 4 years of me working 3 jobs plus coming home and doing my husband’s business paperwork every work night and our combined income didn’t come to $74,000

    • I agree, take the big earners, the CEO’s, Packers, Palmers, Rineharts, Courts and the like out of the equation (the top 10 percent cent) and you would have a true account of what people earn. single Pensioners are receiving $350 per week, and even those with pensions and larger families only make $40.000 per year. Most wage earners are on $50.000 to $80.000 per year. Therefore the figures they are quoting at us is False. We get a lot less

    • Yes same here we had three jobs between us never earnt any where that money. I wonder some times where they get their figures from.

    • I am on aged pension and I can tell u I don’t get $40,000 per year and I have to work as a lollypop lady so I can eat.. and I don’t live high on the hog hardly go out to eat.. don’t drink nor smoke.. and still paying off my house.. there are a lot like me who pay high rents and cant even have the heating on in winter because they cant afford the bills some don’t even have 3 meals a day.. after working most of our lives and paying taxes I reckon we get the raw end of the deal but then I do know there are some who own multi million $ homes and have huge supers and they still cry poor… try and live on the aged pension and u will se what it feels like

    • I am on a carer’s pension and get $23,000 a year but at least in this country we have some level of basic support. Many countries may be cheap to live in but don’t have health and wefare systems in place to support vulnerable people.

  3. Compare living costs with wages, then you get the true story, The Conservatives sell our assets, result, we now pay cooperations rent plus we still pay taxes, a double lot of overheads, the workers carry the weight for the CEO’s to pay themselves millions and no tax…..Tony Inc..

  4. A lot of people, specially the younger generations spend more money on what they think they Want instead of focusing on what they NEED. Big difference to how your budget plays out.

  5. There is no real competition in Australia, with Coles and woollies controlling over 70 percent of everything we consume. And large companies are often self regulated etc….

  6. I have family in the UK and the US. It is definitely more expensive to live in Australia.

    3 REPLY
    • My son lives in the UK and tells me that it is cheaper generally to live in Australia. Incomes are lower in the UK eg average wage 20-30k Pounds pa. petrol is much more expensive, but cars are cheaper. Groceries in Pounds equal Dollars eg 1Pound = $1 Au. You can’t buy white vinegar or cleaning vinegar and the bread is crap.

    • Really my son is doing really well just bought a new property in Brooklyn. I visit regularly and always buy heaps of stuff to bring back home as it is cheaper.

  7. Was in Oz last September and found Coles supermarket rather expensive. 1kg of bananas $3.99 in Nz was paying $1.99. Kiwifruit were 50cents each,in NZat that time .99 cents kg.

  8. Australia has always been more expensive than other countries. I guess it’s a hangover from the days when every single thing had to be brought in on ships that took weeks to get here because Australia was nothing more than a big island.
    Things have changed now but prices have not. The rest of the world had just got used to charging us more and getting away with it because our governments let them.

  9. I visit twice a year and have found prices to be getting more competitive so bargains can be found. Also not everyone is on $75,000. One the Sunshine Coast there are not as many jobs available.

Leave a Reply

Your email address will not be published. Required fields are marked *