Energy bills sends retirees’ cost of living way above the rate of inflation

Prime Minister Malcolm Turnbull will come under increasing pressure to ease soaring energy costs after it was revealed on Tuesday that the cost of living for many retirees is rising above the rate of inflation.

A survey by the Association of Superannuation Funds of Australia found that retirees leading a modest lifestyle in some capital cities suffered a 2.5 per cent rise in living costs in the 12 months to June, considerably higher than the 1.9 per cent increase in the CPI. The jump was blamed on the greater proportion of household budgets spent on electricity, healthcare and council and water rates.

“Energy prices go up and up. This is absolutely a significant cost pressure,” said Ian Yates, chief executive of the Council of the Ageing

For retirees on an age pension the rise in energy and healthcare costs meant that individuals were being forced to cut back on spending in other areas.

“For anyone on a pension we are talking about substituting, such as out of food, public transport and outings for the grandkids. We need to address the cost pressures,” Mr Yates said.

The COTA chief accepted that the government was unlikely to raise the age pension and noted that some states had lifted energy concessions, but said that more needed to be done to help ensure retirees were on the most appropriate energy contracts.

“Certainly one of our messages is that we need greater transparency and accountability around the various plans. People don’t understand the various plans and the way to work out the best plan for them,” Mr Yates said.

Greater disclosure

Earlier this month Mr Turnbull demanded electricity bosses give customers the information they needed to reduce power bills, arguing that more information and greater disclosure could help a household save as much as $1500 a year.

The government is not ruling out regulation if the companies fail to act. On Wednesday Mr Turnbull will again meet energy retail bosses, including the big three providers, to discuss reducing power bills for Australian households and retailers.

The ASFA research found that retirees hoping to lead a modest standard of living would need to $24,270 a year for a single person and $34,911 for a couple.

For individuals living in Sydney, Melbourne, Adelaide, Hobart and Canberra this represented a rise of between 2.2 per cent and 2.5 per cent from a year ago.

Retirees living in Darwin, Perth and Brisbane had the lowest average overall price increases, while those living in Sydney and Adelaide had the highest.

“The cost of retirement over the most recent quarter only increased by a relatively small amount and that is welcome news but many retirees are still finding it difficult to achieve a comfortable standard of living in retirement,” ASFA chief executive Martin Fahy said.

“In particular, retirees with healthcare needs are facing significant increases in costs. The costs of electricity and gas and of council and water rates are a serious concern for many,” he said.

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