Cost of living in Alice: Who’s feeling the pinch?

p2145-cost-of-living-tomatoBy RACHEL McFADDEN

 

A Big Mac here in Alice will set you back 50 cents more than its counterpart in Melbourne.

 

The cost of living in Alice has long been a source of angst amongst locals with food prices across the board higher than in coastal capital cities.

 

Anne says the price for meat is “ludicrous,” paying the same price for casserole meat as she would to purchase a quality cut of porterhouse in Adelaide.

 

But comparing food prices to coastal towns is problematic says Gary Clements, Northern Territory Consumer Affairs Commissioner: “It’s the reality of living in smaller, remote towns.

 

“It is really difficult to pinpoint what exact factors play into higher costs, it can be a hybrid of factors such as population and location.”

 

With exorbitant petrol prices the cost of transporting food no doubt affects the overall cost – so too do higher incomes that businesses have to outlay to retain employees.

 

“It’s a bit of a catch 22,” says long-time resident, David. “Because it’s more costly to live here the incomes are higher, which means businesses have to raise their prices to make a profit.”

 

Still, on some weeknights Alice’s restaurants are near capacity. The same could be said for Friday’s fish and chip night – Anne and David inform me – you have to be strategic when making your booking to avoid the rush.

 

With the national hospitality industry feeling the crunch of the Global Financial Crisis, Alice Springs restaurants appear to be afloat, with a long established restaurant in Todd Mall saying: “Business is good.”

 

Perhaps it is that we to love to socialise and eating out is a great form of entertainment, local socialite Josh Davis suggests, himself going out for dinner at least twice a week.

 

Various employment incentives also have a cushioning effect on the pinch of the higher cost of living. If you work for a charity, in the health sector, are entering into more mature age bracket or are lucky enough to secure a remote housing contract in the private sector – you may not be feeling the squeeze as much.

 

Salary packaging is one of the perks of working for a charity, not-for-profit or health organisation. You can opt to “package” expenses such as credit card liabilities, mortgage repayments, gas and electricity up to  $17,000, thereby reducing your taxable income.

 

In addition, you can place your pre-tax income on meals and entertainment cards, meaning in actual terms dining out is costing you less: “30 percent less,” one health worker estimates.

 

Alice Springs tax accountant Michael Trull estimates salary packaging in these sectors saves individuals up to $5000 to $7000 annually.

 

With the health and community services sector being the second largest employer in Alice Springs, Mr Trull says: “I have at least a couple of hundred clients taking advantage of salary packaging.”

 

The private sector also offers many perks, with several businesses offering remote area allowances. Alice Springs is declared a “remote area” under the Fringe Benefits Tax by the Australian Taxation Office, meaning that employers can offer subsidised housing to employees.

 

There are other tax concessions on offer to employees in Alice Springs, says Mr Trull, such as the “Zone Offset” at $338 (or higher in some cases) per year. While relatively substantial initially, the zone offset was first introduced soon after World War II, is not indexed and rarely increased or reviewed. Therefore it has largely lost pace with increases in the cost of living.

 

p2145-cost-of-living-meatWith the announcement of Tiger airlines ceasing operations in Alice, flight options and prices have yet again fallen to the mercy of one operator. For the many in Alice who have friends and family out of town or need to travel for medical reasons, less competition will no doubt mean higher prices.

 

This too, however, is offset for Alice’s residents over the age of 60, who are entitled to a Northern Territory Seniors Card. Under this scheme, Anne says, residents over the age of 60 are entitled to up to $500 for an interstate trip every two years.

 

“Our generation have the money,” Anne says, “they want to keep us in Alice. There is a perception that Alice is not well off, but make no mistake there is money here.”

 

David agrees and says his job pays an extra $20,000 a year compared to his counterparts in South Australia.

 

The cost of living inevitably needs to be weighed against rising incomes and here in Alice it seems that as prices are higher, so too are incomes. The various employer incentives may be softening the blow but the question remains to what extent?

 

And what about Alice’s significant population that does not receive employer incentives?

 

This question – at least on a macro level – can only be answered by government measures. A spokesperson for the Northern Territory Department of Treasury and Finance said the Consumer Price Index only measures capital cities and what was the annual grocery survey, measuring regional centres, including Alice Springs was ceased in 2012.

 

Christa Bartjen-Westermann from Northern Territory Council of Social Services says that the cost of living is having a greater adverse affect on the more vulnerable part of the population: “Some lower income families are doing it tough, working two jobs to keep things afloat.”

 

There are those who are not benefiting from higher incomes, with 30.4% of Alice Springs’ population not participating in the workforce. In 2006 the participation breakdown was indigenous (41.2%) to non-indigenous (82.8%).

 

That makes the 2006 indigenous participation rate about 25% lower, and the non-indigenous, about 20% higher than the national average which today is 64.7%.

 

This data was taken from Northern Territory Government’s 2008 Economic Profile based on the 2006 Census Data. Interestingly, the Northern Territory Government’s latest economic profile published in 2013 does not break down workforce participation between Alice Springs’ indigenous and non-indigenous populations.

 

p2145-cost-of-living-WoolwoFor those not currently engaged in the workforce and receiving welfare payments the question remains: Has there been a sufficient rise in government allowances to cover the higher cost of living?

 

Government allowances are indexed to the national Consumer Prices Index (CPI). According to a report by Northern Territory Council of Social Services published in April 2014, welfare payments from September 2012 to September 2013 increased by 2.5% in line with the national CPI increase of 2.7%. However, the CPI index for Darwin rose 4.4%, leaving Territorian welfare recipients out of pocket with a shortfall of 1.9%.

 

Keeping government initiatives indexed can be a problem, says Mr Trull, pointing to Alice Springs’ annual zone offset of $380 that hasn’t been raised since 1981.

 

Gary Clements from Consumer Affairs says there are “no price regulations across the Northern Territory. Only the cost of taxis is regulated.

 

“A store is allowed to set whatever price it wants and it’s based very much on supply and demand.”

 

McDonalds gave a similar response when questioned on price discrepancies after The Australian revealed that the price of a Big Mac was higher in some lower socio-economic areas.

 

A McDonalds spokesperson told The Australian: “Each restaurant has a unique set of characteristics that can impact on pricing. For example, trading hours, customer traffic patterns and product demand differ.”

 

Interestingly enough, The Australian report revealed the price of a Big Mac in Spring Lake was $5.50. The price of a Big Mac here in Alice: $5.60. It is $5.10 in Melbourne city.

 

 

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  1. Jocelyn Davies
    Posted July 1, 2014 at 5:21 pm

    Very informative article. Thanks Rachel.

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