How To Beat The Cost of Living Crisis

In Australia, you can’t escape the phrase ‘the cost of living crisis’. It’s plastered all over the news and the front page of newspapers across the country in a scary font. What does it mean, and how would a cost of living crisis affect you, as someone living in Australia?

We’re going to dive into the cost of living crisis we’re currently living through, how energy costs are increasing pressure on families and businesses, and what you can do now to reduce your energy costs and decrease your outgoing costs, to relieve some of that pressure.

So, let’s take a look at the cost of living crisis…

What is the cost of living crisis?

A cost of living crisis is when the overall cost of essential goods and services, necessary for basic living standards, rise significantly, outpacing the income and financial resources of individuals or households. This will include housing, food, healthcare, education, transport, and utilities, etc.

Causes include:

1. Inflation: Australia’s inflation rate is currently 6.8%. To put this into context, the inflation rate in 202 was 2.82@ and 0.87% in 2020.
2. Housing Costs: Rapidly increasing housing prices and rental rates can lead to housing affordability issues, making it difficult for individuals and families to find affordable and suitable accommodation.
3. Stagnant Wages: When wages fail to keep pace with the rising cost of living, individuals may struggle to cover their basic needs and experience a decline in their standard of living. “Australian workers earned only $18 per week more in November 2022 than they did in November 2012.” (source)
4. Healthcare Expenses
5. Education Costs: Rising tuition fees and expenses related to education, such as textbooks and supplies, can make it challenging for families to afford quality education for their children or pursue higher education themselves. “Average student debt accelerated from $18,000 in 2015 to $23,700 in 2021, a 32 per cent increase in just six years.” (source)
6. Energy and Utilities: Increasing costs of electricity, heating, and water can strain household budgets, particularly for low-income households. “Electricity prices will rise by up to a quarter in July in some states after the Australian Energy Regulator issued its decision on the default market offers that set the baseline for retailers.” (source)
7. Consumer Goods: Price increases in essential consumer goods, such as food, clothing, and transportation. “The monthly CPI indicator rose 6.8% in the twelve months to April.” (source)

So, this list shows what causes a cost of living crisis, but why do we have one?

Why is there a cost of living crisis?

“A parliamentary committee passed on its verdict on the cost of living crisis today too, with an interim report confirming wages are not growing fast enough to keep up with inflation as the cost of energy, housing and groceries rise.” (source)

From the list above, you can see that Australia is now hitting all of the essential markers that cause a cost of living crisis.

In summary – it costs more to live your normal life and wages aren’t increasing to match the demand.

You’ll be paying more for food at the supermarket and higher mortgage payments. If you had a student loan you’ll be paying higher repayments, and energy costs will increase. But, your wage hasn’t increased. This makes things tighter on your budget and cash flow.  It can put a real strain on families and businesses.

What about energy costs?

Energy increases during the cost of living crisis

The Australian Energy Regulator (AER) has issued a decision, to raise electricity rates as much as 25% in July 2023. This will impact Victoria and could have been as much as 50%, had federal caps not been put in place, protecting consumers from “unjustifiably high prices”.

“For Victorians, the higher offer adds $352 to the average residential power bill and $752 for small business customers.” (source)

So, as of August 2023, expect your energy bills to increase significantly.

What can you do to reduce the skyrocketing prices? Well, here are your options to reduce your energy consumption and lighten those bills.

How to reduce your bills during the cost of living crisis

“We know that energy efficiency, rooftop solar, electric vehicles, and household electrification can save families thousands, shielding them from skyrocketing energy bills.” (source)

With energy bills about to skyrocket, now is the best time to take advantage of energy-efficiency upgrade offers available in your state. If you’re in Victoria, you can take advantage of the below offers supported by the Victorian Energy Upgrades program (VEU). Many are free, or heavily subsidised.

Upgrade to LED

You can upgrade your outdated, inefficient lights to LEDs from as little as $10 per globe, for residential properties. Commercial buildings are also eligible and it includes lights such as fluoros.

So, if you have any of the above (and other globes you are curious about), please get in touch as we can advise if they can be upgraded.

Remember – upgrading some lights can reduce your lighting costs as much as 95%! Upgrading your downlights to LED could save you $630 a year*!