The drivers of energy-related financial hardship in Australia – understanding the role of income, consumption and housing

Abstract

The drivers of energy-related financial hardship in Australiaunderstanding the role of income, consumption and housing Saunders and Bedford (2017) demonstrated that income levels are inadequate for some Australian households to maintain a basic standard of living. Analysing utility bills can extend this consideration of income adequacy issues given the essential nature of services such as electricity, telephony and water. This article builds on the work presented by Simshauser and Nelson (2014) about key demographic cohorts in Australia that have a high incidence of energy-related financial hardship. Our analysis indicates that energy related financial hardship is likely to be related to a combination of the following: family formation demographics; low-income (often reliant upon government income support); higher household size; and higher than average consumption. Our policy recommendations are relatively straightforward: development of tools to allow easier 'shopping around' by energy customers; cessation of credit-checking by energy retailers as a means of restricting access to energy offers; reform of state-based concessions frameworks; a lifting of income support for some key cohorts (e.g. unemployed); improvements to energy-efficiency standards; and amendments to tenancy laws to overcome potential principal-agent issues associated with uptake of new products and services such as embedded solar PV and battery storage.

Social Assistance Payments and Food Insecurity in Australia: Evidence from the Household Expenditure Survey

“…Australian households that were disconnected or at risk of disconnection experienced very difficult financial circumstances, in which they often struggled to afford necessities such as food and housing [59]. In a recent article, Nelson et al (2019) suggested, among other solutions, increasing income support for particular groups (including those on Newstart) as well as the reform of state-based energy concessions to combat energy poverty [60].…”

Factors Contributing to Energy‐related Financial Stress in Australia

“…Nelson et al . () identified household size as being related to energy‐related financial hardship. KPMG () also noted that large low‐income families with five or more people would be most affected by rising energy costs.…”

The importance of social financial support in reducing food insecurity among elderly people

“…Thus, iIncreasing financial social assistance may reduce severe effects associated with food insecurity in households. For example, in Newfoundland and Labrador in Canada, food insecurity dropped significantly in 2007-2011 because of social assistance reforms (Nelson et al 2019). It has been shown that a one-off increase in social assistance benefits leads to a significant decrease in moderate and severe food insecurity (Li et al 2016).…”