ACTCOSS’s annual cost-of-living report, published this morning, warns that Canberra faces disaster.

Financial stress has worsened over the last year; more middle- and high-income households are feeling pressures; and poorer households are being left behind.

“We are witnessing the shrinking of our middle class,” ACTCOSS CEO Dr Devin Bowles said.

High inflation and high interest rates mean low-income households cannot pay for housing, food, and other essential goods and services, the report states.

Inflation has outstripped wage increases, leaving many households worse off and financially stressed.

The inflation rate, while less than in 2023, is still high, at 3.7 per cent, which has exacerbated a long-running crisis in cost-of-living for low-income households in the ACT.

The prices of many essential goods and services have risen above the cost of inflation:

• Education (+26 per cent)
• Housing (+22.8 per cent)
• Medical and hospital services (+22.4 per cent)
• Transport (+22.3 per cent)
• Childcare (+21.4 per cent)
• Food (+20 per cent)
• Gas (+20 per cent)

Low-income households spend more of their income on non-discretionary items than middle- and high-income households do, so changes in the prices of goods disproportionately impact them.

“While some households have needed to reduce discretionary spending, or switch to cheaper brands of essentials, those living on the lowest incomes have had to make much harder choices, between turning the heating off or missing rental payments and risking eviction; between enough food and adequate medical treatment,” Dr Bowles said.

In 2019–20, 8.6 per cent of Canberrans (38,000 people) lived below the poverty line. ACTCOSS has not adjusted the poverty line, the most recent, since then, but believes that even more people are below the poverty line.

“There are thousands of Canberrans who saved for a rainy day, only to have it rain for years,” Dr Bowles said. “We are witnessing a once-in-a-generation economic shift that will grow the wealth gap and make Canberra a less fair place, without decisive action.

“The cost-of-living crisis might be happening in slow motion, but it is still a disaster for thousands of families across Canberra. It is still a disaster for our community, which is watching the wealth gap increase even as many of those experiencing poverty are working harder than ever…”

More Canberrans in need seek help

More full-time workers are seeking support, increasing demand on the overworked and underfunded community sector. (ACTCOSS recently launched an election campaign calling on the government to increase funding; otherwise, services could close.)

The number of people seeking assistance from St Vincent de Paul Society Canberra/Goulburn has increased by 30 per cent, while a third had never approached Vinnies before.

Vinnies CEO Lucy Hohnen says there is a new cohort of ‘working poor’: people who have mortgages or pay rents, households with two incomes, yet who have no money left to put food on the table or to make ends meet.

“They can’t afford to pay their bills, car registration, fuel to go to work, food, and other material goods that are essential,” Ms Hohnen said. “People probably had enough savings to get through COID. Now we’re seeing the impact of that. People have used up their savings. There’s nothing left. They’re living week by week.”

More people are coming to Vinnies’ night patrol vans to get sandwiches for their kids’ lunch the next day: “They don’t even have enough provisions for their children,” Ms Hohnen said. In fact, demands for food relief have increased by up to 70 per cent.

Carmel Franklin, CEO of Care Financial Counselling Service, agrees. Many Canberrans have ended up in a debt spiral because they are using buy now pay later services, payday loans, or credit cards to pay for their essential goods.

For instance, someone uses credit to pay their electricity bill, or to buy food, then pays interest; their first payments go to credit obligations, so they have less money for future rent or mortgage payments, forcing them to rely more on credit and escalating interest.

“Everything has gone up … and suddenly people are finding that they can’t keep up with costs,” Ms Franklin said. “We’ve become very reliant on using credit, and that’s fine if we can afford to repay it – but if things go pear-shaped, and you can no longer pay it, you’re paying interest on top of interest, and it just becomes a whole spiral that you can’t get out of.”

Care reports that it has provided 17 per cent more support to clients experiencing financial hardship since 2022–23. The main issues are housing stress and utility stress, Ms Franklin says.

In the last 12 months, Care provided nearly 900 rent relief grants for people in private rentals who were in arrears (fallen behind with their rent), and 530 energy support vouchers for people struggling with energy bills. Since the rent relief scheme started last year, the uptake has been so high that the waiting list is a couple of months. (The government has only funded it to the end of this financial year, but Care believes it should be an enduring scheme.)

Housing shortages

“We’re seeing the impact of dual crises: the cost-of-living crisis as well as the housing crisis,” Ms Hohnen said.

Low-income families could afford none of the 1,085 rental properties on offer, according to Anglicare’s 2024 Rental Affordability Snapshot.

“The rental market priced out low-income households and people on social security payments a long time ago,” says Travis Gilbert, CEO Of ACT Shelter, which represents the interests of people living in or looking for social and affordable housing.

“It is now pricing out people earning more than $80,000 who want a house with a backyard. A six-figure income is needed to rent a detached house with a front yard and a backyard, and not to be in rental stress [spending more than 30 per cent of income on rent]. That breaks the academic definition of housing stress.”

Likewise, people on salaries that would be considered average in other states spend two-thirds of their incomes on mortgages.

Social and affordable housing is 65 per cent of what is needed, the report finds, and social housing is declining over time, Mr Gilbert said. (A fortnight ago, Shelter and ACTCOSS called for a more ambitious housing policy.)

As at 1 July, 3,152 people are waiting for public housing, some of them for more than five years (1,953 days). The ACT has set a 15 per cent affordable target, Mr Gilbert noted, but has not specified minimums for the social housing or the affordable rental component; in fact, it has the smallest percentage of affordable rental dwellings managed by community housing providers in the country.

As a result, more women are forced to stay in violent relationships or leave and face poverty and even homelessness, according to the Domestic Violence Crisis Service.

The cost of children

The cost of raising children in Canberra has become more expensive, ACTCOSS has found.

A low-paid single-earner couple with two children spent $9,308 per child last year; a single parent in full-time employment with two children $12,220. For a family moving to Canberra in 2024, the additional living cost for each child is $5,400 per year (excluding childcare and schooling costs), according to the ANU.

Almost one in 10 Canberra children (9.6 per cent) live below the poverty line (2021 figures), and child poverty rates are as high as 21.1 per cent in some suburbs. This is higher than the national child poverty rate of 17 per cent.

Children’s charity Roundabout Canberra found that the number of children needing material support increased by 32 per cent.

The ACT lags behind only the NT in poor children’s access to education, inhibiting them from realising their full potential, while centre-based childcare and family day care in the ACT were the most expensive in Australia last year.

Welfare support

Income support payments are inadequate, leaving many recipients below the income poverty line, according to ACTCOSS.

Although the federal government last year increased JobSeeker and Youth Allowance by $20 per week and JobSeeker for people over 60 by $80, this was “far from enough”, the report states. In December, a single person on Youth Allowance (other) had a weekly income 38 per cent ($184) below the poverty line of $489 per week, while a single person without children on JobSeeker had a weekly income 22 per cent ($110) below.

ACTCOSS wants the federal government to increase the rate of JobSeeker, Youth Allowance, Parenting Payment Single, and related payments to the same rate as pension payments (at least $80 per day), and to index payments to wages as well as prices.

Election challenge

ACTCOSS has called on the ACT Government to ensure a fairer system of concessions and taxation; to increase investment in cost-of-living supports; to expand social and affordable housing; to increase investment in education equity; to increase funding for community services; and to invest in a fair, fast, and inclusive energy transition.

“The ACT election needs to be a cost-of-living election,” Dr Bowles said. “The Reserve Bank has advised Australians that interest rates won’t be coming down in a hurry, and Australia’s economy remains vulnerable to external shocks.

“Right now, there are thousands of Canberra voters feeling the effects of the cost-of-living crisis and poverty. Many of them did not imagine they would be in this situation when they voted at the last election because they thought you couldn’t have a job and experience poverty.

“If Canberrans don’t make this election about the cost of living, then the circle of people experiencing poverty, even those in jobs, could increase further.”

The ACT Government has been asked for comment.

Canberra Liberals

Canberra Liberals leader Elizabeth Lee called the report “sobering reading”, and blamed the ACT Government’s high rates for the increase in poverty.

“Canberrans are continuing to experience a significant cost of living crisis, and worryingly, the report found that things are getting worse – especially for those who are already struggling,” Ms Lee said.

“[Chief Minister] Andrew Barr promised Canberrans that this year’s budget would be a cost-of-living budget that would deliver real relief for those in our community doing it tough.  Instead of providing this much needed relief, Andrew Barr has slugged Canberrans with increases to taxes and charges, including:

• Increases to household rates by between 4.5 and 9 per cent
• Vehicle rego fees up 4 per cent
• Driver licence fees up 4 per cent
• Public transport fees up 3 per cent
• Increases to the safer families level and the police, fire and emergency services levy.

“This is on top of increases to electricity charges – which increased by 12.75 per cent this year, and water and sewerage charges both increasing by 7 per cent, and Canberrans are already slugged with the highest costs for fuel and access to essential healthcare.

“Only a Canberra Liberals government will deliver real cost of living relief to all Canberrans, with tangible and practical support to help parents with school costs, rebates on rego and electricity fees, abolishing the GP payroll tax, and guaranteeing a cap on household rates.”

Strong Independents

The Strong Independents said the ACTCOSS report was proof that the Barr government was not a caring government.

“The Strong Independents know that the population of the ACT, the people of Canberra, care for those less needy,” Peter Strong AM and Ann Bray AM said. “The ACTCOSS report … shows that the government doesn’t reflect the views of its citizens.”

“The recent Barr budget was trumpeted as ‘the cost of living Budget’,” Mr Strong said. “As a result, people thought it would help make cost of living easier – but the budget, obviously now we see the figures, was about increasing the income of the government to help the Treasurer limit the ACT’s debt. The government could have been more open and less ambiguous.

“It is a serious matter that people who are needy, and also many who have what are considered to be reasonable incomes, are taking a hit on their capacity to live. Increases to education and travel costs, medical and hospital services, and childcare are not what the Barr government said they would do – but here we are.”

“We cannot let the needy and the young, the homeless, and those unwell or with chronic illness suffer even more than they do already,” Ms Bray said. “We need the government to take real action.”

Mr Strong congratulated ACTCOSS and its members on “a professional report that puts the government on notice”.

“This report was completed by the people who deal with the issues everyday – and let us thank them for the courage to stand up and make the statement – holding the current government to account. Without a Strong cross bench, we will continue to have a lack of transparency in the ACT administration and government processes, and misleading announcements.”