Number 7: Updating Australian budget standards costs of children estimates

This report was published by the former Department of Families, Community Services (FaCS).

Executive Summary

In 1995, the then Department of Social Security commissioned the Social Policy Research Centre (SPRC), University of New South Wales, to develop budget standards for Australian households. Apart from contributing to adequacy research, the project provided estimates of the costs of children in various household types at two different standards of living: a ‘low cost’ standard, representing a frugal standard but which allows social and economic participation; and a ‘modest but adequate’ standard, representing middle Australia.

The costs of children estimates presented in SPRC’s consultancy report are based on costs of living in Sydney for February 1997. Written in June 1999, this paper has several purposes:

  • to provide revised costs of children estimates after errors found in the original calculations were fixed and more realistic assumptions about household expenditure introduced;
  • to update the estimates from February 1997 to the more recent past (that is, December 1998); and
  • to provide costs of children estimates for household types and scenarios not covered by SPRC’s original work.

All costs of children estimated in this paper are inclusive of costs for household durables.

Section 2 summarises the SPRC budget standards project and the method for calculating costs of children estimates. Knowledge of the project and the budget standards methodology is assumed. See the Executive Summary of SPRC’s consultancy report (Saunders, et al., 1998) or Henman (1999a) for an introduction to the project.

Costs of children estimates can be obtained from budget standards using various methods. The ‘difference method’ involves subtracting the budget standard for a household without children from the budget standard for the respective household with children. The ‘itemised method’, which is not used in this report, involves the summation of the costs of individual items, or part thereof, used by children. Once a set of estimates using either of these two approaches has been obtained, the range of estimates can be widened by the use of regression models.

Section 3 explains how SPRC’s original budget standards have been modified and extended to make them more realistic and representative. To address a peculiarity in the SPRC leisure budgets, additional leisure items have been added for households with children. Additional leisure items have also been added to sole parent households to help equalise the treatment between single women with children and those without.

Additional household types have been constructed to broaden the costs of children estimates available and to increase their accuracy. These household types include: a single woman not in the labour force; a sole parent of a girl aged six (not in the labour force and at the modest but adequate level); a couple with a 10-year-old boy; and a single man.

SPRC’s work has also been extended to provide budget standards and costs of children estimates in each Australian State capital city. This was done using statistics on the differential costs for housing, energy, child care, food and fuel. It was found that Sydney has the highest costs of living, followed by Darwin, and Adelaide has the lowest costs of living. For practical policy purposes, a weighted average budget standard for each household type is constructed from the budget standards for each capital city.

Section 4 explains how SPRC’s budget standards for February 1997 have been updated to March 1999, and how they can be, in principle, updated to the present day. The usual and simple practice is to apply the overall Consumer Price Index (CPI) for a particular city to the relevant budget standard. In this paper, the CPI-measured changes in small sub-categories of goods and services are applied to individual items in the budget standards’ component budgets. It was found that updating the budget standards using this component-wise update results in budget standards that are generally higher than that using the overall CPI.

In Section 5, the costs of children estimates are calculated and presented. The difference method is first used to establish a set of costs of children estimates. These are then used to obtain estimates for other household types using regression models. A summary of the estimates is provided in Table 8.

As at December 1998, the cost of one child ranges from $75 to $136 per week at the low cost living standard, and from $98 to $191 per week at the modest but adequate living standard. Generally, the older the child, the greater the cost. The exception is for pre-school age children when all parents are working full-time. The costs of children are also normally highest in Sydney, with a few exceptions.

In couple households, the cost of one child ranges from 18 to 37 per cent of a household’s budget (that is, disposable income). The costs of two children appear to consume about 40 per cent of a household’s budget. Three children consume between 43 and 52 per cent of a household’s budget. Four children consume between 49 and 59 per cent of a household’s budget. For sole parents, the cost of one child constitutes 24 to 32 per cent of the household budget. Two children cost between 42 and 50 per cent of the household budget.

From February 1997 to December 1998, the estimated costs of children have increased. Increases in child care costs and in private rental are the dominant reasons for this change. For one child, the overall increase ranges from $3 to $19 per week.

The estimates reported here are greater for children at the modest but adequate living standard than those in SPRC’s original report, and about $3 to $4 per week less for those at the low cost living standard.

The cost of sole parenthood—that is, the additional cost of being a sole parent as compared with couples with children—is estimated in a similar manner. Such costs range from -$9 per week at the low cost level to $8 per week at the modest but adequate level. Pensioner concessions for such things as transport and energy explain the negative cost of sole parenthood at the low cost level. Costs of sole parenthood were not found to vary significantly in different geographical locations.

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1 Introduction

In April 1998, the then Department of Social Security (DSS) published a consultant’s report of the Budget Standards Project (Saunders et al. 1998). The research was conducted by the Budget Standards Unit of the Social Policy Research Centre (SPRC) at the University of New South Wales. The research was commissioned in 1995 by DSS for two reasons: as an element of the Adequacy Project (DSS 1995) to provide alternative measures and information with which to measure the adequacy of social security payments; and to provide up-to-date estimates of the costs of children, using a basket-of-goods research methodology.

Since publishing the research report, DSS and its replacement, the Department of Family and Community Services (FaCS), have undertaken a thorough, critical examination of the research, including its methodology and assumptions. Papers detailing this work have been published in a special edition of the Social Security Journal (Whiteford & Henman 1999; Henman 1999a; 1999b; Mudd 1999; see also Whiteford 1999). Whilst this work provides a critical assessment of the budget standards research, it recognises the usefulness of the research for ongoing policy research and debate.

The costs of children estimates of the budget standards research have generated considerable interest in the general community, within lobby groups and amongst policy makers. However, as the consultant acknowledged:

the budget standards presented in [their Report] still need a good deal more exposure among the community generally before they can be viewed with confidence as having the legitimacy required to provide a solid basis from which to exert an influence on policy (Saunders et al. 1998, pp. 631–632).

Accordingly, this paper reports further refinement to the original research as part of a critical examination conducted by DSS, and then FaCS. In particular, the intention is to make the research more appropriate for, and relevant to, policy research and to provide revised and updated estimates of the costs of children.

The remainder of this paper is in five sections. The next section, Section 2, provides an overview of SPRC’s budget standards research and the costs of children estimates. To make them more appropriate and applicable for policy development, Section 3 specifies and justifies the adjustments and extensions made to SPRC budget standards. Section 4 presents the process adopted in updating the February 1997 budget standards to the present. Revised costs of children estimates based on the adjusted, extended and updated budget standards are presented and discussed in Section 5. A concluding section summarises some of the lessons learnt in undertaking this work which builds upon SPRC’s original budget standards research.

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2 The SPRC budget standards project and costs of children estimates

Readers are assumed to be cognisant of SPRC’s budget standards and the assumptions on which they are based. Whilst SPRC’s research report (Saunders et al. 1998) provides the best description of the research and its assumptions, it is over 600 pages long. To assist interested parties, an overview paper was prepared which summarises the research and discusses the likely major points of interest (Henman 1999a).

Readers should also be aware that SPRC’s budget standards are considered to be indicative only. They are a first attempt at this type of research in Australia for some time and, as SPRC acknowledges, should be subject to revision after wider discussion and debate. The DSS publicly expressed its reservations about some aspects of the research methodology. In particular, the treatment of household durables has generated sustained debate (Harmer 1997; Whiteford & Henman 1999; Saunders et al. 1998, pp. 20–27, 107–110, 471–485). In addition, the budget standards are based on Sydney data and therefore reflect Sydney’s housing prices, which are higher than in the rest of Australia. Debate about this resulted in work on how to adjust housing prices to reflect costs in other locations (Mudd 1999; Henman 1999b; Saunders 1998, pp. 24–28; see also Section 3.3 below). It is important that readers be aware of these debates about methodology (Henman 1999a).

Of particular concern to this paper, is the way budget standards are used to estimate the costs of children (see Saunders et al. 1998, pp. 591–599). There are two main approaches. The difference (or deductive) method estimates the costs of children by subtracting the budget standard for a household without children from the budget standard for a household with children. The difference between the two is assumed to be the additional cost associated with having children. In short, this method measures the change in expenditure from changing household status.

The itemised method involves the identification of all the items (or part of them) associated with children. Thus, this method measures the expenditure on children, rather than the cost of the change in household status. For most items in the budgets, there is no difference. For example, the need for extra bedrooms is both an additional cost and all of that cost is associated with having children. However, having children reduces the parents’ leisure costs because of reduced leisure time, but, at the same time, there is an increase in the children’s leisure costs. Thus, for the leisure budget, the itemised method will produce a value slightly greater than the deductive approach.

The choice of which method to use for estimating the costs of children should be determined by what exactly it is intended to measure. This will, of course, be influenced by the related policy questions. For example, do you want to know the increased cost to households of having children (that is, the difference method) or the costs of goods and services used by children (that is, the itemised method)? Such estimates are also distinct from the estimate of the cost in setting up a household to have children—that is, transition costs.

The method used may also be determined by the amount of time available to the researcher. The difference method is much simpler and quicker to apply than the itemised method. However, the divergence between estimates derived from these two methods can be significant.

In its report, SPRC used the difference method for estimating the costs of children (Saunders et al. pp. 591–599). Subsequent research at SPRC has used the itemised method for estimating the costs of children (Saunders 1999; Saunders & McHugh). Depending on the particular assumptions made in allocating costs to children, the actual estimates using this method vary. For example, households with and without children are each assumed to own a television. Should part of the cost of a television be allocated to the child on the basis that the child watches it, or should there be no cost, as there is no additional cost associated with having the child?

In identifying the costs of children, SPRC first estimated the cost of one child (at different ages) and the ‘incremental’ costs for two, three and four children (Saunders et al. 1998, pp. 596–599).

The SPRC’s subsequent research using the itemised method suggests that the two methodologies can produce different costs of children estimates. In particular, the itemised method would be expected to generally produce higher estimates than those using the difference method. For example, at the low cost level, the cost of a girl aged six in a two-child couple private renter household was estimated by SPRC using the difference method as $102 per week (Saunders et al. 1998, p. 597; cf Saunders 1999, Table 2). Using the itemised method however, produced a range from $92 to $133 per week (Saunders 1999, Table 2).

The SPRC developed budget standards for a fixed range of household types. For example, there is only one type of couple with two children (a girl aged six and a boy aged 14). For policy analysis, it is often necessary to know what the costs of children are for different household combinations. The SPRC illustrated how such cost could be estimated by creating a regression model of their budget standards (Saunders et al. 1998, pp. 609–614). A regression model is a statistical model that is used to estimate the effects of various independent variables on a dependent variable. The model is constructed on observations—in this case, SPRC’s original budget standards. Following the model’s construction and the calculation of regression coefficients, the value of new observations, using different independent variable combinations, can be estimated. In this case, budget standards for households with different household compositions can be estimated.

In Section 5 of this paper, the costs of children for December 1998 are estimated using the difference method. The costs of children for other household types are also estimated using an updated regression model.

Since the publication of the budget standards report, SPRC and DSS/FaCS have identified several errors in the budget standards spreadsheets. Accordingly, all household budget standards have altered. An earlier update of these changes was published previously (Henman 1999b, Tables 1 and 2). Since then, a few more corrections have been made, some of which were substantial.1 Tables A.1 and A.2 in Appendix A show the corrected budget standards as agreed between SPRC and FaCS. The tables include budget standards for several new household types, the details of which are summarised in Table 2 of Section 3.3.

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3 Making SPRC’s budget standards more realistic and representative

There are two main areas in which SPRC’s budget standards can be adjusted to make them more realistic and representative. Firstly, allocation of each item in each of SPRC’s budget standards is based on many assumptions. As recognised by SPRC, these assumptions must be open to public discussion and debate to legitimise the research (Saunders et al. 1998, pp. 631–632). This paper presents the arguments for making some adjustments to the standards and presents the results of doing so (Section 3.1). Secondly, SPRC’s budget standards are defined for very particular circumstances. Accordingly, the standards are extended to estimate budget standards for alternative circumstances, including new household types (Section 3.2); alternative geographical locations (Section 3.3); and new time periods (Section 4).

3.1  Adjusting the budget standards’ assumptions

There has been a significant level of debate concerning the appropriate assumptions underlying SPRC’s budget standards. For example, Whiteford and Henman (1999) argued that the cost of durables should be removed from the low cost budget standards when considering the adequacy of short-term income support payments. Despite the cogency of these arguments, except where otherwise indicated, the costs of durables, as allocated by SPRC, have been included in the budget standards and calculations reported in this paper

3.1.1 Leisure budgets

With regard to the costs of children estimates, there is some agreement within FaCS that the allocation of leisure goods and services in SPRC’s budget standards are, at times, inappropriate. This section explains these allocations, argues for their adjustment and presents the effect of making the adjustment. These arguments were presented to the SPRC by FaCS—see letter at Appendix B—and the department has since received an informal response of general agreement.

For some leisure goods—including video hire, camera film, compact discs (CDs) and blank audio tapes—SPRC’s leisure budgets include fewer items for households with children compared with households without children. In contrast, one might expect that the presence of children would increase the use of such items, rather than reduce it. The reason for this somewhat peculiar outcome is the use of SPRC’s time-use model to allocate some leisure items. (For full details, see Chapter 10 of Saunders et al. 1998.)

Briefly, SPRC’s time-use model estimates adult time-use patterns for different types of leisure (active, passive, social, gardening, other) and how leisure time changes with labour force status and household composition. For example, most categories of leisure time for adults decrease because of employment and the presence of children. This is to be expected. However, SPRC uses these changes in leisure weights to specify the differential use of such

things as video hire, photographs and CDs. In other words, the presence of children decreases the amount of video hire, photographs and CDs that a household consumes. Consequently, for such items, the presence of children reduces expenditure, thereby reducing the estimates of the costs of children. This result is counter-intuitive. Rather, what would be expected is that the amount of items such as video hire for adults would decrease, but there would be additional video hire for the children. In short, SPRC has failed to include some allocation of certain goods in its leisure budgets—namely, magazines, CDs, blank video and audio tapes, video rental and camera products—for children.

To address this situation, DSS/FaCS has proposed the following. For households with children, a normatively-defined amount of additional leisure items be allocated for the first child and for each additional child. Whilst the actual amounts are readily acknowledged to be open for debate and discussion, Table 1 presents the adjustments that have been used for this paper.

Table 1: Annual child leisure goods adjustments

Leisure adjustment variables (items/year) Additional leisure items for households with a child Additional leisure items for each additional child
Magazines 2 1
Video rental 10 2
Blank video tapes 2 1
Blank audio tapes 1 1
CDs 3 1
Camera products (film and processing) 2 1
Photo album 2/3 1/3

It may not necessarily be appropriate to add two magazines for a three-year-old girl. To maintain simplicity, though, the adjustments are not sensitive to the age of the child, although it is possible to do this.

The effect of these adjustments add to the low cost budgets for households with children from $2.29 per week for one child to $5.35 per week for four children. At the modest but adequate level, the addition ranges from $3.96 to $8.84 per week.

A further adjustment that FaCS raised with SPRC (see Appendix B) concerns the differential between low cost and modest but adequate leisure budgets. Again, the issue concerns the use of SPRC’s leisure model to allocate leisure goods and services to households. As expected, unemployment and non-attachment to the labour force (because of retirement or full-time parenting) increases certain types of leisure time. This, combined with the different labour force status of most low cost households compared with modest but adequate households, leads to the allocation of more items such as video hire, photographs and CDs for low cost households.

On the one hand, this may seem a reasonable result. However, it could be argued that increased leisure time does not require increased leisure expenditure, particularly for a low cost living standard. For example, instead of hiring more videos, people can watch television and home-recorded videos more often. Instead of buying more CDs, those already purchased can be listened to more often, or the radio can be an alternative. These options are virtually free, except for electricity costs.

The normative approach, which is used here, is to fix the allocation of the relevant leisure items to low cost households despite labour force status. Allocations were fixed to the minimum allocations for the equivalent modest but adequate households, namely for all adults employed full-time. Such an approach was used by SPRC for the allocation of swimming. The additional swimming for unemployed, low cost households was treated as free (for example, in the river or longer visits to the pool), rather than in increased pool entrance fees.

Due to labour force status, this adjustment does not affect retired households. For all other households, this adjustment reduces low cost budget standards from $2.62 (H7i) to $6.13 (H7c) per week. One implication of this change is that it increases the cost of employment for a low cost male by three to four dollars per week. Its effect on the estimated costs of children is marginal, with a maximum change (a decrease) of 66 cents per week.

3.1.2 Sole parent budget standards

Another set of problems with SPRC budget standards involves the sole parent budget standards. In particular, SPRC’s budget standards estimated a negative cost of sole parenthood. This is contrary to the findings of most other research in this area (Whiteford 1991; Whiteford & Hicks 1993). Indeed, SPRC was aware of this and stated in its report ‘the estimates of the costs of sole parenthood ...must be heavily qualified and treated with extreme caution. More realistically, they serve to illustrate that the [SPRC] budget standards do not provide an adequate basis for estimating the cost of sole parenthood’ (Saunders et al. 1998, p. 606).

The SPRC detailed the reasons for its concerns, namely the limitations of the difference method for estimating the costs of sole parenthood and the limitations of the budget standards methodology, more generally (Saunders et al. 1998, pp. 603–606). However, the budget standards do highlight a number of important considerations in estimating the costs of sole parenthood in contemporary Australia. In particular, sole parents in receipt of income support (namely, Parenting Payment [Single]—formerly Sole Parent Pension) receive a pensioner card that entitles them to a range of concessions. For example, pensioners in New South Wales (where SPRC’s budget standards were developed) do not have to pay for their car registration or driver’s licence, and they also receive discounted third party person insurance. These concessions are valued in the budget standards at $213, $21.60 and $18 per annum (that is $4.09, $0.41 and $0.35 per week) respectively for low cost sole parents. Low cost sole parents also receive energy at concessional prices. The low cost sole parent budget standards also include a telephone pensioner concession of $12 per annum (that is $0.23 per week). The cost of transport for low cost sole parents is also less than that for couples because, while single women and couples with and without children households require travel for reasons such as work and jobsearch, sole parents do not.2

Despite these important observations, there are clearly aspects in SPRC’s budget standards for sole parent households that do not adequately reflect the needs of sole parents. In particular, the sole parents’ leisure budgets do not take account of the needs of a single adult for adult company. For example, whilst the single women households go to art galleries, museums and pop concerts, the sole parent does not.3 Their only entertainment is with their children. Consequently, there is no child minding allocated to the sole parent to enable activities with other adults to occur.

To address these issues, the sole parent has been allocated pop concerts and art gallery/ museum visits according to the leisure weights and consistent with their living standard level (that is, modest but adequate, versus low cost). Consistent with this, an appropriate adjustment to the transport budget has also been made. In total, these changes add up to $2.52 per week to the modest but adequate sole parent households and $1.23 per week to the low cost sole parent households.

A modest allocation of child minding has also been added to enable these additional adult leisure activities as well as other activities, such as visiting an adult friend for dinner. At the modest but adequate level, six occasions per year of $30 per occasion have been added. This equates to $3.45 per week. At the low cost level, child minding is assumed to be free, being provided by friends and family. Child minding is assumed to be relevant to all children except the 14-year-old boy.4

For a similar reason, the sole parent households have also been allocated a copy of the board game Trivial Pursuit.5 SPRC allocated couples, with and without children, a Chess/Draughts/ Backgammon set, and couples without children a Trivial Pursuit set, but allocated sole parents neither (Saunders et al. 1998, 396).

These changes, whilst modest, increase the estimated costs of sole parenthood (for one child) by approximately one dollar per week at the low cost level and six dollars per week at the modest but adequate level.6

Given these adjustments, if any adults are disadvantaged, it could be argued that partnered mothers are disadvantaged. In particular, the single non-aged women (with and without children) now attend pop concerts, the museum/art gallery and the non-aged men (with and without children, single and coupled) go to the football. In contrast, the partnered non-aged women do not do any of these activities, nor do they undertake other activities that the others do not. Indeed, at the low cost level, the partnered women are now not allocated any social leisure activities (for example cinema, art gallery, museum, pop concert, sports spectators), but single women (with and without children) are.7

The difference between the leisure weights of sole mothers and partnered mothers must also be considered. These weights are used to allocate various leisure goods and services. It was argued in Section 3.1.1 that the additional amount of leisure available to unemployed households (at the low cost level) should not necessarily equate to increased leisure costs. Consequently, it was explained that the weighting for these low cost households was fixed to the employed modest but adequate households. Similarly, a normative judgement could be made to equate the leisure time of sole mothers and mothers within a couple on the basis that

they should have the same leisure needs. Table 10.B in SPRC’s report presents the leisure weights for various household types (Saunders et al. 1998, pp. 413–414). At the modest but adequate level, leisure weights for sole mothers are greater than partnered mothers, and this leads to a greater allocation of various leisure goods and services to the sole mothers. At the low cost level, the weights are generally greater for the coupled mothers. Given that the weights have been adjusted for low cost households to equal those for modest but adequate households (see Section 3.1.1), the overall effect is to have a slightly greater allocation of some leisure goods and services to sole mothers as compared with partnered mothers. No further adjustments to the leisure weights have been made. Consequently, sole mothers have slightly more leisure goods and services than equivalent partnered mothers do. This is argued to be appropriate, given the need of sole parents for adult company.

3.1.3 Miscellaneous corrections

There are several other miscellaneous assumptions that are questionable and require amendment.

  • The low cost unemployed couple with a three-year-old girl (households H9c, H10c and H11c have been allocated occasional child care. The reason for this allocation was to allow the mother respite for reasons such as going to see the doctor. SPRC did not consider occasional care to be necessary for children of other ages, as the mother can have ‘respite’ when the children are at school. However, this paper argues that given the father is unemployed, there is no reason why he is unable to provide the respite for the three-year- old girl. Accordingly, the allocation of occasional care has been removed. The occasional care would, of course, be necessary if the father was employed.
  • At times, the costing of holiday accommodation (see Saunders et al. 1998, Table 10.6, p. 407) seems inappropriate. Firstly, the couple with a girl aged three (H9) is assumed to holiday during school holidays, although it is not necessary and is more expensive. Secondly, although the households without children are assumed to holiday outside of the premium school holiday period, the allocated cost for holiday accommodation rental for these modest but adequate households is higher than those households with children! This results from different holiday locations at the modest but adequate level—households with children go to Forster, whilst households without children go to Shoal Bay and retired couples go elsewhere. As the budget standards methodology aims at fixing the standard of living across household types, behavioural data indicating that households with children holiday at ‘cheaper’ places should be irrelevant. Accordingly, the different allocations to households seem inappropriate. Consequently, the budget standards have been amended so that all (non-retired) modest but adequate households go to Forster, as is done at the low cost level. Thirdly, SPRC allocated a two-bedroom holiday unit to the couple with three children (household H10). Despite SPRC’s assumption that three and six-year-old girls can sleep in the lounge (Saunders et al. 1998, p. 406, note 22), there is an argument that this is not possible for two children. Accordingly, the holiday accommodation rental for H10 has been adjusted to a three-bedroom unit. This allocation is also consistent with the allocation for the four-child household (H11). These adjustments affect households H1a, H1b, H2a, H2b, H9a, H9b, H9c, H10a, H10b and H10c. They generally increase the cost of children, because of a reduction in the cost of childless households. At the modest but adequate level, the cost of one child increases by approximately $5 per week, except for the three-year-old girl, which increases by only about $1.50 per week. The cost of three children increases by about $2.70 per week. At the low cost level, the only changes are for the cost of a three-year-old girl (decrease of about $0.70 per week) and for the cost of three children (increase of about $1.30 per week). The changes decrease the estimated cost of sole parenthood by $2.60 per week at the modest but adequate level, but do not affect the low cost estimate.
  • The SPRC’s report explains that at the low cost budget standards, cinema attendance is only allocated to the single woman and the 14-year-old boy. However, the spreadsheets also include cinema attendance for all other low cost household children. This allocation leads to the inappropriate result that low cost household children attend the cinema without adult supervision. (All people at the modest but adequate level go to the cinema.) There are two approaches: either cinema attendance for children at the low cost level can be removed, or attendance for the adults be applied. A minimal adjustment has been made by reducing children’s annual cinema attendance from two to one and allocating to an adult, one annual cinema attendance, for supervision.

In addition to these miscellaneous adjustments, it should be noted that SPRC’s report is ambiguous about the treatment of mortgage principals in the housing budget (Saunders et al. 1998, pp. 134–141). It is stated in different places that the mortgage principal has not been included in the modest but adequate home purchaser budget standards for various reasons. It is also stated that it is included. The spreadsheets confirm that SPRC’s published overall budget standards include the mortgage principal.8

This section has described the changes made to SPRC’s budget standards on the basis that a small number of SPRC’s original assumptions were not appropriate or inadequately reflected in the spreadsheets. The remainder of the paper is based on the inclusion of these assumptions. Tables A.3 and A.4 in Appendix A present the budget standards as adjusted for these assumptions. They can be contrasted with Tables A.1 and A.2 to assess the effect of these new assumptions. It should be noted that, despite the debate about SPRC’s inclusion of the depreciation of household durables in the budget standards, such depreciation has not been removed. Interested readers should see Henman (1999b) for an assessment of the impact of removing the depreciation cost of household durables from SPRC’s budget standards. Except where otherwise stated, the treatment of durables throughout this paper is unchanged from that used by SPRC in its original report (Saunders et al. 1998, pp. 107–110).

3.2  New household types

SPRC’s budget standards were constructed for very specific households. In particular, the ages and sexes of a household’s occupants, their labour force status and their housing tenure are clearly defined. SPRC’s budget standards also reflect the requirements and costs of living in Sydney—the Hurstville Local Government Area, in particular—and the costs at February 1997.

Accordingly, due to their specificity, the ability to generalise from SPRC’s budget standards is limited. However, the spreadsheets supporting SPRC’s budget standards do provide the flexibility to widen the applicability of the budget standards by creating new budget standards for other households.

Previous work presents the results from creating budget standards for new household types. Henman (1999b) describes how budget standards were constructed for a couple with a boy aged 10 years. These budgets were then used to provide more reliable estimates of the cost of a 10-year-old boy. Also, Henman and Mitchell (2001) presents budget standards for a non-resident father who has regular contact with his non-resident children (girl six and boy 14).

Of these household types, this paper only makes use of the budget standards for the couple with a 10-year-old boy (household H13). In addition to these types, this paper reports budget standards for other new household types: a single male aged 40; a single woman aged 35 who is not in the labour force; and a sole parent who is not in the labour force and is at the modest but adequate living standard.9 Details of these standards can be obtained from the author. Summary details of these new household types are shown in Table 2.

Table 2:   Descriptions of household budget standards

  Occupants Employment Tenure Level
H1d Single female (35) Not in the labour force Purchaser—2 br unit MBA *
H1e Private renter—1 br unit MBA
H1f Private renter—2 br unit Low cost
H4e Single female (35), girl six Not in the labour force Purchaser—2 br house MBA
H4f Private renter—2 br unit MBA
H13a Couple (male 40, female 35), boy 10 Both employed full-time Purchaser—3 br house MBA
H13b Male unemployed Private renter—2 br unit MBA
H13c Female not in the labour force Private renter—2 br unit Low cost
H14a Single male (40) Employed full-time Purchaser—2 br unit MBA
H14b Private renter—1 br unit MBA
H14c Private renter—1 br unit Low cost
H14d Unemployed Private renter—1 br unit Low cost

*Modest but adequate

Budget standards for these new household types are presented in the tables in Appendices A and D.

3.3  Budget standards for other locations

SPRC’s detailed spreadsheets also allow the creation of budget standards for locations other than Sydney. As Sydney housing and rental prices are higher than almost anywhere else in Australia, it is particularly inappropriate to assess policy using, and base policy decisions on, SPRC’s original budget standards. This section discusses how SPRC’s budget standards have been used to construct budget standards for other Australian locations, namely capital cities.

There have been a couple of previous attempts to construct budget standards for other locations. As housing costs are both highly variable geographically and make up a significant proportion of a household’s budget standard, the focus to date has been on adjusting these costs. Apart from housing costs, this section discusses how budget standards for all Australian capital cities have been derived by adjusting costs for energy, child care, food, petrol and other household items. The section finishes with a discussion about average capital city budget standards.

Before considering how to adjust SPRC’s Sydney-based budget standards to produce budget standards for other capital cities, it should be noted that SPRC priced many items in the household budget standards from stores with national pricing policies, including Target, Kmart and IKEA. In other words, the prices of those items would be the same in other major shopping centres. Consequently, constructing geographic budget standards for such items does not require price adjustments. Rather, they would require an assessment of whether that particular item is needed or not, or whether other items should be included. For example, due to the national prices of clothing in the clothing budgets, creating locational clothing budgets for climates similar to Sydney would not require adjustment. However, warmer climates would require less winter clothes and more summer clothes, and more winter clothes and less summer clothes would be required for colder climates than Sydney.

3.3.1 Housing

To date, there have been two different approaches to varying housing costs due to geographical location. Henman (1999b) presents one approach whilst Saunders (1998) presents another. For several reasons, both approaches only customise SPRC’s budget standards for private renters. Firstly, as discussed by SPRC in its report (Saunders et al. 1998, Chapter 3), identifying budget standards for home purchasers is extremely problematic. Essentially, as mortgages depend on too many variables—including purchase price, length of mortgage, interest rate and amount of capital repaid—virtually any level of mortgage can be specified. Further, there is some uncertainty about how to treat mortgage capital repayments in a budget standard. Secondly, data on house purchase and rental prices are more readily available than public housing and home owner costs. Thirdly, there are good arguments for the position that, for a budget standard, private rental costs are a better indicator of housing expenditure.

Private rental

As Mudd (1999) argues, customisation of budget standards by adjusting private rents is far from straightforward. Briefly, average rents in one location often purchase a different level of amenities and services (for example, public parks, labour markets, quality of housing, natural environment, pollution) than average rents in another location. To equate living standards in different locations, as a budget standard methodology aims to do, quality-adjusted rents are more appropriate than simple average rents to customise budgets to other locations. Henman (1999b) uses the quality-adjusted approach, whilst Saunders (1998) uses the average rents approach. This paper uses the quality-adjusted approach after comparing the outcomes of using the two different approaches and examining their implications for estimating the costs of children.

To adjust the budget standards using quality-adjusted rents, use is made of research conducted within DSS in 1996. That research constructed a statistical model from the Australian Bureau of Statistics (ABS) 1994 Australian Housing Survey data to estimate the effects of a number of variables on housing prices (1996, Figure 5.4). That model can be used to estimate private rents in each Australian capital city to achieve the same housing quality standard. These estimates are shown in Table 3.

Table 3:   Quality-adjusted private rental costs (1994, $/week)—and as percentage of Sydney rents

City 1 bedroom unit 2 bedroom unit 3 bedroom unit
Rent cf Sydney Rent cf Sydney Rent cf Sydney
Sydney 142   163   182  
Melbourne 93 65% 114 70% 133 73%
Brisbane 95 67% 116 71% 135 74%
Adelaide 76 54% 97 60% 116 64%
Perth 79 56% 100 61% 119 65%
Hobart 83 58% 104 64% 123 68%
Darwin 123 87% 143 88% 162 89%
Canberra 88 62% 109 67% 128 70%

Source: Generated from DSS, 1996, Figure 5.4.10

These are estimated average rents for 1994. This information is used to determine private rents for budget standards in other capital cities, by taking the relativities between Sydney and other cities to adjust SPRC’s Sydney-based private rents. Henman (1999b, Table 9) provides estimated low cost rents for February 1997, that is, when SPRC’s budget standards were priced. Table 4 lists the estimated quality-adjusted private rents for February 1997 for both living standard levels.

This quality-adjusted approach to private rents has the advantage of attempting to ensure that budget standards for different locations are purchasing a similar standard of housing and related amenities. If instead, average rents were used, this fixing of the same living standard, which budget standards require, could not be expected. In particular, one capital city may have, on average, much older rental stock and poorer amenities than another.

However, despite these strong factors supporting the quality-adjusted approach, there are a few problems. Firstly, there is no guarantee that there are sufficient (or any) private rental stock in other locations with the same quality as those used in Sydney. Secondly, the use of actual rents is more straightforward and transparent than the quality-adjusted approach, which requires acceptance of the related statistical model. Thirdly, as Saunders (1999, p. 26) observes, the average rents for Sydney are somewhat greater than those for the Greater Hurstville Region. This is important, as the application of the quality-adjusted approach equates Sydney with the Greater Hurstville Region, the area on which SPRC bases its budget standards rents (Henman, 1999b). Consequently, the resulting rent estimates for other capital cities would be lower than if the correct adjustments were made. However, it must be noted that, in developing the budget standards, SPRC chose the Greater Hurstville Region on the basis that it was ‘reasonably representative of the Greater Sydney region’. Indeed, SPRC regarded Hurstville’s representativeness of housing characteristics as ‘most important’ (Saunders et al. 1998, p. 120). Accordingly, the equating of Sydney rents with rents from the Greater Hurstville Region can be, at least, partly justified.

The Real Estate Institute of Australia (REIA) publishes the most appropriate rental data for adjusting budget standards for different locations. It publishes a quarterly update of average house prices and private rents (REIA 1997). Saunders (1998) used the Institute’s March quarter data for adjusting rental costs to construct budget standards for other capital cities. Unfortunately, the Institute only publishes capital city rental averages for three-bedroom houses and two-bedroom flats/units. In contrast, budget standards are provided for one, two and three-bedroom units only. To address this limitation of the data, Saunders (1998, p. 25) used the detailed data on two-bedroom rents (REIA 1997, p. 9) to identify the median and first- quartile rents and then used these to adjust the relevant budget standards households. Using the relativities between the two-bedroom unit rents and one and three-bedroom units Saunders then derived the rents for all other household types. To these first-quartile and median rents, an eight per cent reduction is then applied to account for the bias of access rents. This was also done by SPRC in constructing the budget standards (Saunders et al. 1997, pp. 131–132).11 Table 4 shows the results of these calculations.

Table 4:  Estimated private rents for low cost and modest but adequate households in Australian capital cities derived using quality-adjusted rents and actual rents (February 1997, $/week)

City One-bedroom unit Two-bedroom unit Three-bedroom unit
LC MBA LC MBA LC MBA
QA Actual QA Actual QA Actual QA Actual QA Actual QA Actual
Sydney 120 135 136 159 152 171 166 193 192 216 208 243
Hurstville LGA   120   136   152   166   192   208
Melbourne 78 92 89 113 106 117 116 138 140 148 152 174
Brisbane 80 101 91 119 108 128 118 144 142 162 155 182
Adelaide 64 72 73 91 90 92 99 110 122 116 133 139
Perth 67 65 76 82 93 83 102 100 125 105 136 126
Hobart 70 75 80 91 97 96 106 110 130 121 141 139
Darwin 104 108 118 134 133 137 145 163 171 173 186 205
Canberra 74 94 84 110 102 119 111 133 135 150 147 168

Key: LC = Low cost living standard; MBA = Modest but adequate living standard; QA = rents adjusted using quality-adjusted rents; Actual = rents adjusted using actual rents.

Source: Author’s calculations based on DSS (1996) and REIA (1997). See text for details.

As can be seen from an examination of Table 4, the customisation method using actual rents produces higher rents than the quality-adjusted method. The reason for this disparity seems to result from equating Hurstville local government area with Sydney in the quality-adjusted method. However, it should be noted that the use of actual rents is biased upwards by luxury inner-city apartments, particularly in Sydney and, to a lesser extent, Melbourne and Brisbane.

Also, the living standards to which SPRC’s budget standards were developed are not likely to include inner-city living. Accordingly, the appropriate adjustment should be for rental costs in Hurstville-like areas in other capital cities, rather than using a city average rent. For these and other reasons the quality-adjusted method is preferred (Mudd 1999).

In using the budget standards to estimate the costs of children, it is not the actual rent level, but the difference in moving from a one-bedroom unit to a two or three-bedroom unit. An analysis of Table 4 reveals that these differences are smaller for the actual method, although the difference between the two methods is generally small. Consequently, estimated costs of children will be (slightly) higher when using the quality-adjusted rents, rather than actual rents, to estimate housing costs in other locations. At the same time, budget standards for non-Sydney locations would be lower when using the quality-adjusted rents method compared with using the actual rents method.

Home purchasers

There are similar issues involved in adjusting budget standards for house purchasers to take account of the effect of geography. Unfortunately, a model does not exist that estimates the quality-adjusted costs of housing in different locations. Consequently, adjustments rely on published data on the relativities of median house prices. Such medians are published by the REIA in its quarterly Market Facts. In addition to medians, the publication provides median prices in ‘inner’, ‘middle’ and ‘outer’ areas of capital cities. (The Greater Hurstville Region lies in the ‘middle’ area of Sydney.) For simplicity, only capital city medians have been used (Table 5).

Table 5:   Median house prices in capital cities (December 1998)

Location Median price ($’000) % of Sydney
Sydney 262.4  
Melbourne 205.0 78%
Brisbane* 139.0 53%
Adelaide 125.0 48%
Perth 142.5 54%
Canberra 155.0 59%
Hobart 105.0 40%
Darwin 165.0 63%

Source: Market Facts, December 1998, Table 1, REIA
* Brisbane based on September 1998 data

These averages are of house sales in the previous quarter. Accordingly, they are entry prices, rather than the prices paid on mortgages a few years earlier, as is assumed in SPRC’s budget standards. This is not entirely a problem, as it is the relativities that are important when adjusting the budget standards to take account of geography. The correct relativities would be based on median house prices some years earlier. However, given that SPRC acknowledges that the level of mortgage in a budget standard is virtually arbitrary (Saunders et al. Chapter 3.4), there is little sense in trying to be too precise. The data in Table 5 are, therefore, a useful indicator of differential housing prices.

In creating budget standards for other locations, the above relativities were used to adjust both mortgage principal and interest components. This is because the interest component is based on the purchase price and the interest rate, and the interest rate can be assumed to be constant nationally.

At this stage, no geographical adjustment has been made for other home purchaser costs, such as local government rates and water charges.

Public housing and home owners

At this stage, no geographical adjustments have been undertaken for public housing rents and for outright home owners (that is, without a mortgage). Costs for home owners that could be adjusted include local government rates and water charges.

3.3.2 Energy

Household energy costs vary by geography due to price variation and variations in the actual amount of energy the household requires. For example, independent of the cost of energy, households in cold climates require energy for heating not required in milder climates. Accordingly, it is not sufficient to adjust SPRC’s energy budgets by average cost per unit energy prices. Rather, the adjustments must combine both price and usage differentials. Fortunately, Table 4.6 of SPRC’s report provides relevant data (Saunders et al. 1998, p. 175). Energy budgets for non-Sydney Australian capital cities were obtained by applying the differential between each city and Sydney to SPRC’s energy budgets. In applying the data from Table 4.6, ‘South Australia’ was used as a proxy for Adelaide, ‘Melbourne’ as a proxy for Hobart and Canberra and ‘Perth’ as a proxy for Darwin. The data were also compared with average capital city energy costs as measured by the ABS 1994 Household Expenditure Survey (ABS 1996a, Table 4) as a separate benchmark and to confirm the appropriateness of the proxies.

3.3.3 Child care

For households with working adults and young children, child care is a significant component of the household budget and of the estimate of the costs of a child. Accordingly, it is important that child care costs are adjusted to take account of any geographical difference in prices.

FaCS has administrative data that provides an indication of average long-day child care costs in different Australian capital cities (Table 6). The differential between these data were used to adjust SPRC’s Sydney child care costs (and child care subsidies) to generate child care costs (and subsidies) for budget standard households in other capital cities.

Table 6:   Average centre-based long-day child care costs in Australia (December 1998)

Location Average costs ($/week) % of Sydney
Sydney 173  
Melbourne 161 93%
Brisbane 158 91%
Canberra 174 101%
Adelaide 166 96%
Perth 159 92%
Hobart 180 104%
Darwin 152 88%
Australian average 162 93%

Source: Unpublished internal FaCS administrative data

3.3.4 Food and other household costs

As mentioned above, there is a limited range of Australian data published indicating price differences due to location. ABS publishes a selection of such data for capital cities in its quarterly Average Retail Prices of Selected Items (ABS, Cat No. 6403.0). ABS uses this data for updating the Consumer Price Index (CPI). Whilst the majority of costs published refer to food prices, prices are also published for some household supplies (detergent, tissues, toilet paper, pet food), petrol, alcoholic drinks and personal care products (soap and toothpaste).

In constructing budget standards for other geographical locations, data differentials from this publication for the relevant quarter were used to adjust components of the food, household goods and services, personal care, and transport budgets. These components are based on the CPI sub-components used to update the budget standards. (Details are provided in Section 4.) Table C.1 of Appendix C provides a listing of the sub-components that were used to update the budget standards. Those, which are italicised, have been adjusted to account for geographical variations.

In adjusting for variation, items in Average Retail Prices of Selected Items were associated with the CPI sub-components listed in Table C.1. However, not all items from the publication were used. Only those that accorded with items in SPRC’s budget standards were used. For example, in updating the ‘Meat and seafoods’ sub-component of the food budget, within the ‘Beef’ category in Average Retail Prices, prices for T-bone steak and chuck steak were used, but prices for silverside roast, rump steak and silverside (corned) were not. This is because the first two are more consistent with the price and type of items in SPRC’s food budget, but the latter three are not.

Having decided on which items in Average Retail Prices to use to adjust SPRC’s budget standards, the next difficulty was to work out the differential price between Sydney and another location. It is not sufficient to add up the selected items in one category from Average Retail Prices. This is because some items are expensive but, as they are used over a long time, they do not account for a large component of the cost in the budget standards (for example laundry detergent, flour). In contrast, some items are cheaper, but are used more often (for example bread, fruit). As an example, for the sub-category ‘Cereal products’, the price of cornflakes was added to double the price of bread, and then the differential between the two locations were calculated. Because the cost of flour and rice in SPRC’s food budgets were comparatively small, the prices of these items in Average Retail Prices were not used at all.

The discussion so far has detailed the areas in which SPRC’s Sydney-based budget standards have been adjusted to take account of the effect of geography when creating budget standards for other locations. The italicised components in Table C.1 indicate the level of such adjustments. To summarise, consider the nine component budget standards.

The major elements in the housing budget have been adjusted, except for public rents. The entire energy budget is adjusted for the effect of location. Most elements of the food budget have been adjusted. Whilst the clothing budget has not been adjusted, it must be remembered that SPRC used national pricing stores to price the clothing budgets. More importantly, however, is the adjustment to the clothing needs due to location, which has not been done. Some elements of the household goods and services budget have been adjusted, whilst some components (such as furniture, and postal and telephone charges) are priced at stores with national prices. Only automotive fuel in the transport budget has been adjusted and only toiletries have been adjusted in the personal care budget. Finally, no adjustments have been made to the health care and leisure budgets.

It should also be noted that SPRC included some items at concessional prices for some households, including the retired and sole parent households. Whilst some of these concessions are provided by the Federal Government (for example, subsided pharmaceuticals through the Pharmaceutical Benefits Scheme), some are provided by the State Government and some are provided by businesses (for example, telephone concessions). At this stage, no attempt has been made to identify how the concessions in SPRC’s Sydney-based budget standards might change due to geography. Accordingly, the concessions are assumed to be the same.

Again, it must be restated that the above described adjustments are to prices and not allocations. Geography can affect prices as well as the required allocation of goods and services to households. The differential need for clothing due to climatic change is a clear example. The only adjustment to allocation has been in the energy budget. Adjustments to allocation is a much harder exercise than adjustments to pricing. The reader can consider how adjustments to allocations due to geography may effect the total budget standards that have been derived.

3.3.5 Australian average budget standards

As explained above, budget standards represent the cost of the goods and services required by a particular household, in a particular place, in a particular time in order to achieve a specified standard of living. Clearly, budget standards are very specific.

In contrast to this specificity, public policy must be applied more generally. This is necessary to avoid complexity and to achieve a perceived equality of treatment. Such generality is necessary for national Australian policy, such as that in the social security and taxation systems. Thus, a household with a couple and a six-year-old girl is likely to be treated the same way as a household with a couple and a six-year-old boy. Similarly, a single person living in Canberra is likely to be treated the same as a single person living in Cairns.

Accordingly, there is a policy imperative to use the budget standards to estimate costs for average Australian households. Such an average budget standard can be constructed from those produced. However, it must be made perfectly clear, conceptually, an average budget standard is an incoherent concept. Budget standards refer to specific situations and cannot be averaged.

With this important proviso in mind, the budget standards for Australian capital cities were averaged with each capital city weighted by its population size. (Population sizes are given in Table 7.) Thus, the smaller cities had a smaller effect on the average. Similarly, a non-Sydney capital city average was estimated. Whilst these averages do not make sense as budget standards, one can conceptualise them as the average cost of living for specific households.

Table 7:   Population numbers, 1996

City/location Population (millions)
Sydney 3.276
Melbourne 2.865
Brisbane 1.291
Perth 1.097
Adelaide 0.978
Canberra 0.323
Hobart 0.126
Darwin 0.070
Total (Capital cities) 10.027
Non-Sydney total 6.750

Source: ABS Census of Population and Housing 1996, Cat No. 2016.0

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4 Updating the budget standards

The above text explained how the budget standards were corrected for errors and for assumptions that are questionable and how the resulting Sydney budget standards were used to construct budget standards for households in other capital cities. The paper now goes on to update them to the present. This enables the budget standards to remain relevant for policy research and ensures that changes in the normative benchmarks and costs of children are more accurately calculated.

In Section 15.3 of its report, SPRC discusses the various ways in which its budget standards can be updated over time (Saunders et al. 1998, pp. 623–628). One approach is to apply to the overall budget standards an index of inflation, such as the CPI. There are several problems with such an approach. Firstly, it does not take account of differential price changes and how they may impact differently on the baskets of goods and services associated with each household type. Secondly, the CPI measures movements in prices, but not of living standards. Alternative measures of change include Average Weekly Earnings or Household Disposable Income Per Capita (as the Henderson Poverty Line does).

A second approach is to undertake a component-wise update of budget standards using the components of the CPI.

A third approach is to reprice the goods and services in the budget standards. This quite resource expensive approach, would be unlikely to be of a sufficiently higher accuracy than the second approach, to be justified. However, this approach can capture changes in social policy that impact on prices, but that are not always encompassed by the CPI.

A final approach is to reconstruct the entire budget standards. This approach would be even more resource intensive and would only be justified in the long-term. However, the advantage of this approach is that it enables the budget standards to reflect changes in living standard expectations in Australia.

The SPRC prefers to combine the methods: to update the budget standards using the (component) CPI in the short-term (three to five years); to reprice the budget standards every five years; and to reconstruct the budget standards every seven to 10 years.

The focus here is to update the budget standards in the short-term—that is, from February 1997 to March 1999—using components of the CPI. In particular, the Sydney CPI components were used to update the Sydney budget standards as described below. The required data are not published but can be purchased from ABS. SPRC’s budget standards were priced for February 1997. In updating the standards using the quarterly CPI, the budget standards were assumed to represent the standards for the March 1997 quarter.

In updating the budget standards, each component budget was broken down into smaller sub-components reflecting the sub-components in the CPI. These are indicated in Appendix C. In most cases the smallest CPI sub-components were used to categorise items in component budgets. However, there were a few occasions when CPI sub-categories were combined. For example, the clothing budget was not broken down at all, but adjusted to the ‘all clothing’ CPI. It was decided not to break down such components on the basis that the size of the component budget standards was not large and that movements in the sub-components were similar. In contrast, changes in prices for fresh fruit and vegetables are often quite different to those of processed food and vegetables. In this case, these sub-components were treated separately.

From June 1998, ABS revised its CPI categories and method for calculating the CPI. Accordingly, updating the budget standards has been a two-phase process using two slightly different categorisations. The twelfth series of the CPI ended at the June 1998 quarter, with the thirteenth series beginning in the September 1998 quarter. A major change from the twelfth to the thirteenth CPI series was the deletion of changes in mortgage costs. Whilst the earlier series had a ‘Mortgage interest charges’ item, the new series included a ‘House purchase’ item that measures changes in house prices.

The question of how to update budget standards for purchaser households is difficult to answer. A number of issues have to be considered. Firstly, how should mortgage capital repayments be updated? There are two obvious approaches, to leave fixed or to update according to movements in house prices. These two approaches reflect different understandings of the updated budget standards. To illustrate, assume the standard is for a given purchaser household, say a couple with a six-year-old girl. With the first approach, the updated budget standard represents the changes to the household’s expenditure requirements over time. In this case, the household already has a mortgage on a house; the house price was fixed when the house was purchased, so that changes in house prices will not affect their mortgage capital repayments. In fact, there is no change in their mortgage capital repayments, but only their interest repayments as the variable interest rates change. But, under this scenario, the household occupants age. The girl turns seven. However, the budget standard remains for a couple with a six-year-old girl, and is not aged. In other words, the budget standard should be for a new household.

A second approach, therefore, represents a new couple with a six-year-old girl household. Accordingly, mortgage capital repayments should be updated to reflect changes in house prices. However, as SPRC’s housing budgets assume purchaser households bought their house some five years earlier, changes in capital repayments should be based on changes in house prices some five years earlier. In addition, instead of simply adjusting mortgage interest repayments by changes in variable interest rates (as is done in the first case), mortgage interest repayments should be based on the updated mortgage principal (some five years earlier) and the changed mortgage rate in the last quarter.

Given the complexity of the second situation, although the more accurate, it was decided to adopt the first approach: to keep mortgage principal repayments fixed and update mortgage interest repayments based on changes in variable interest rates. Another reason for adopting this less accurate approach is that the level of mortgage costs for budget standards is virtually arbitrary (Saunders et al. 1998, Section 3.4). Therefore, in updating the budget standards for home purchasers, mortgage capital repayments were held constant, and the mortgage interest repayments were updated to June 1998 using the ‘Mortgage interest charges component’. After June 1998, mortgage interest repayments were updated using changes in housing loan interest rates, as published in Australian Economic Indicators (ABS Cat No. 1350.0, Table 8.5). Despite the approach adopted here, it is recommended that mortgages for purchaser households be recalculated every few years based on movements in house prices. This will ensure that mortgage costs remain ballpark.

Another significant issue is how to update prices of concessional products. This is especially important when the policy for allocating concessions changes. One example is child care. Since February 1997, when SPRC priced its budgets, the Federal Government introduced significant policy changes to the calculation of child care subsidies. In calculating child care costs in their original budget standards, SPRC identified gross child care costs and calculated the government child care subsidies based on February 1997 policy. One approach for updating child care costs would be to identify gross child care costs at a new time and recalculate government child care subsidies for that new period. However, this approach relies on the identification of updated gross child care costs. As confirmed with the ABS, the child care sub-component of the CPI measures changes in average out-of-pocket, that is, net child care costs. Thus, instead of using the CPI to estimate updated gross child care costs, from which child care subsidies are then calculated, the CPI is more easily and appropriately applied to SPRC’s net child care costs. This is what was done. (Similar comments can also be made about government-subsidised pharmaceuticals.) However, it must be acknowledged that as the CPI measures average changes, it is not sensitive to policy changes that may effect different groups differently. For example, policy changes may increase costs for high-income households, but reduce costs for low-income households, thereby leaving average costs unchanged. The only way to address this, is to reprice the relevant goods in the budget standards.

Tables D.1 and D.2, in Appendix D, present the total Sydney budget standards updated from February 1997 (that is March 1997 quarter) to the March 1999 quarter for the modest but adequate and the low cost levels respectively. For more detailed information, Tables D.3 and D.4 present the Sydney component budgets for December 1998. These budget standards represent the updated standards of those presented in Tables A.3 and A.4 of Appendix A. In particular, these standards include the corrections and adjustments agreed with SPRC since publication of the original report (Saunders et al. 1998), include the adjustments specified in Section 3.1, and include the full cost of household durables as specified by SPRC in its report. For interest, Table D.5 provides the low cost budget standards that do not include ‘expenditure’ on household durables with a lifetime of greater than three years.

As expected, the component-wise update of the budget standards using Sydney CPI components produces different updated standards than the overall Sydney CPI. This is because the relative composition of the CPI basket of goods and services is different to the household budget standards. Figures D.1 to D.8 show how the component-wise update varies from the overall CPI for various household types. These figures provide an indication on the relative effect of housing status, household size and age of children on the differences changes between household budget standards.

Figure D.1 compares CPI changes with changes in budget standards for a fixed household type (a sole parent with two children) by variations in household tenure and living standard. It shows that overall CPI movements are similar to those for the low cost public renter, at least until June 1998. However, CPI movements overstate the movements for a modest but adequate purchaser, and understate the movements for private renters at both living standard levels. The major reason for the differences is the importance of changes in mortgage interest rates and their effect on the CPI. Given that ABS has now removed mortgage interest changes from its CPI, it will be interesting to observe the extent to which the differences remain. Indeed, the changes since June 1998 for the purchaser are more in line with the CPI. The difference between changes in low cost and modest but adequate levels is also worthy of examination. However, given the trace lines, it is too early to make a conclusion about whether the modest but adequate budget standard rises faster than the low cost budget (or vice versa).

Figure D.1 also indicates that the budget standards without depreciation of household durables (lifetimes of more than three years) rises faster than those with such depreciation. This observation is in fact repeated for all low cost households.

An examination of the other Figures suggests that all housing tenure types, except purchasers, have risen faster than the CPI and that single adult household budget standards have experienced a higher change than those for couples (except for purchasers). However, the effect of household size, as it increases from a couple with one, two, three and four children, is not consistent (Figures D.3 to D.5). This is also the case for single adult/sole parent households (Figures D.6 and D.7). Apart from differential impact of child care costs, the age of the child does not seem to produce different effects to changes in (a one-child couple) household budget standards (Figures D.8 and D.9). This is not surprising, since the age of the child has a minimal impact on the level and composition of the household budget standard. It is also worth noting that since the beginning of the thirteenth series, updated budget standards have generally risen faster than the CPI.

There are two ways to construct updated budget standards for non-Sydney capital cities. Firstly, the Sydney budget standards can be used to construct non-Sydney budget standards and then these can be updated using non-Sydney CPI data. Alternatively, the Sydney budget standards can be updated using Sydney CPI data and then non-Sydney budget standards can be constructed, as discussed in Section 3 above, using the most up-to-date differential information. Although no method is preferred, the second method was used.

Having updated Sydney budget standards, budget standards for other capital cities were constructed for December 1998 using the method described in Section 3.3. In particular, the most recent datasets were used. In addition to those presented above, the December 1998 quarter edition of Average Retail Prices of Selected Items (ABS, Cat. No. 6403.0) was used for adjusting elements of the food, household goods and services, transport and personal care budgets. Tables D.6 and D.7 provide the overall December 1998 quarter budget standards for all capital cities for modest but adequate and low cost levels respectively. The Tables also present the weighted capital city averages and the non-weighted capital city average of the capital city standards.

To obtain an appreciation of the effect of geography on the budget standards, Figure D.10 shows the December 1998 budget standards for the sole parent with two children for different housing tenure types and at different living standards levels. The diagram indicates that there are places with definitely higher budget standards, namely Sydney and Darwin, and areas with lower budget standards, especially Adelaide. In contrast, the relative budget standards for Melbourne and Perth appear to change with housing tenure. For example, Melbourne seems to be the second most expensive city for purchasers, but the fifth most expensive location for private renters.

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5 Costs of children estimates

As explained earlier in Section 2, there are two main approaches to estimating the costs of children from the budget standards: the difference method and the itemised method. As the difference method is quicker and easier to undertake, the costs of children estimates reported here are based on that method. Readers interested in the estimated cost of children using the itemised method should see Saunders and McHugh (forthcoming).

The estimated costs of one child and of more than one child in a couple household for December 1998 are discussed in Sections 5.1 and 5.2 respectively. Section 5.3 considers the estimated cost of children in sole parent households and Section 5.4 discusses the estimates of the cost of sole parenthood.

Regression models can be used to estimate costs of children in household types other than those for which budget standards have been prepared (see Section 2). Estimates of the cost of children in other household types for December 1998 are presented in Section 5.5.

To repeat, all the calculations in this section are based on the budget standards that: have been corrected and adjusted as agreed with SPRC since publication of the original report (Saunders et al. 1998); have been adjusted according to that outlined in Section 3.1; include the full cost of household durables as specified by SPRC in its report; have been updated to December 1998 using the Sydney CPI components as explained in Section 4; and have been constructed for other capital cities from the Sydney December 1998 budget standards using the method detailed in Section 3.3.

5.1  Costs of one child

This section explains the process of deriving cost of children estimates from the December 1998 budget standards shown in Tables D.3, D.4 and D.5 of Appendix D.

Table E.1 in Appendix E provides the estimated costs of one child for different ages at December 1998, at the modest but adequate standard, using the difference method. The calculations are based on adult-couple household, both employed full-time and who rent privately. Costs are given for each capital city. For comparison, the costs in Sydney at February 1997 are also provided. The costs of a 10-year-old boy have been calculated using the budget standards previously prepared for a couple with a boy aged 10 (Henman, 1999b). For more information see Section 3.2, Table 2.

Table E.2 provides the estimated costs for one child of different ages at the low cost level. The calculations are based on a privately renting adult-couple household where the father is unemployed and the mother is not in the labour force. As with Table E.1, costs are given for each capital city for December 1998 and, for comparison, the cost for Sydney in February 1997. Also included are costs of children estimates in Sydney for December 1998 where there is no expenditure on durables with lifetimes of greater than three years. These latter estimates are based on the budget standards presented in Table D.5.

The costs of children for modest but adequate home purchasers have not been calculated. The main reason for this is that the housing cost for purchasers is too variable to be meaningful.

Tables E.1 and E.2 provide costs of children estimates for quite specific households. However, for policy and other purposes, there is a need to provide estimates for other household types. In particular, what is the cost of children when the labour force status of the adults change.

SPRC’s research shows that there is a cost effect associated with changes in labour force status (Saunders et al. 1998, pp. 606–609). However, the effect of changing labour force status on the estimated cost of children is likely to be different and vary according to the ages of the children. The question to be answered is whether there are any costs associated with children that change because of labour force status. In SPRC’s budget standards, there are only two such items—child care and the distance travelled in private vehicles.

When both parents work outside of school hours, child care is obviously needed. For example, at the low cost level, if the man changes from being unemployed to being employed full-time (female not in the labour force), only occasional care for the three-year-old girl, for respite, is needed. At the modest but adequate level, if the female changes from being employed full-time to being not in the labour force, child care is not necessary (apart from some occasional care for respite for the three-year-old). At the low cost level, child care is only relevant for the three-year-old girl. This is because it is used as respite, which is not needed when children are old enough to go to school. At the modest but adequate level, child care is relevant to all children, except the 14-year-old boy. The effect of child care on the estimated cost of children is, at times, very substantial. For example, in December 1998 the costs of child care for a three-year-old girl drops from an average of $95 per week (for long-day care) when both parents are employed full-time to an average of $9 per week (for occasional care) when one parent is not in the labour force.

Tables E.12 and E.13 respectively summarise net child care costs for couple-adult and sole-parent households.13 It should be explained why child care for sole parents is sometime less than for the respective couple households. See, for example, the cost of a three-year-old girl, where all parents are employed full-time. The difference arises because of the level of Childcare Assistance14 is income related. As the budget standard for a sole parent household is less than an equivalent couple household, so is the income required to meet the budget standard. Consequently, the sole parent may be eligible for a greater level of Childcare Assistance than the couple household, and this explains the occasional difference in net child care costs between the two households.

In contrast, the effect associated with private vehicular travel is minor and only relates to low cost households with a six-year-old girl. When at least one of her parents go to work, the girl is dropped to school on the way to work and so there is no specific trip to the school. However, when none of her resident parents work—because they are either unemployed or not in the labour force—the household’s travel budget decreases because they do not need to travel to work, but they do need to make new separate trips to drive their daughter to school. This does not effect the three-year-old girl, as she does not go to school, nor does it effect the boys aged 10 and 14, as they are assumed able to make their own way to school. The cost effect of this transport change in Sydney is $5.25 in February 1997, and $5.12 in December 1998.

Thus, Table E.3 provides the costs of one child for a couple—male employed full-time, female not in the labour force—at December 1998 at the modest but adequate level. These have been derived by subtracting the costs of child care for the equivalent households in Table E.1 and, where relevant, adding the cost of occasional care for a three-year-old girl. Similarly, Table E.4 presents the costs of one child for a couple—male employed full-time, female not in the labour force—at December 1998 at the low cost level. Because this Table reflects a transition of the male from being unemployed to being employed full-time, its derivation from Table E.2 is somewhat different to that for Table E.3. The estimates in Table E.4 have been derived from Table E.2 by, where relevant, adding the cost of occasional care for a three-year-old girl and subtracting the cost of separate transport to school for a six-year-old girl.

As would be expected, the Tables E.3 and E.4 are identical to Tables E.1 and E.2 respectively, except for the Transport and Household Goods and Services budgets. Indeed, the total cost of children at the low cost level does not change with labour force status except for when either a three or six-year-old girl is present. The presence of the three-year-old girl involves an $8 increase in the cost of children due to occasional child care. In contrast, the presence of the six-year-old involves a $5 decrease due to there being no need to make separate trips to drop her off to school. At the modest but adequate level a change in the mother’s labour force status reduces the costs of one child by up to $86 (girl three), but leaves the cost of a 14-year- old boy unchanged. Without the need for child care, the costs of children in modest but adequate households follow the pattern of the costs of children in low cost households, namely, costs increase as the age of the child increases.

The tables indicate that the cost of a child is generally more expensive in Sydney than elsewhere. However, there are a few exceptions. Costs of children are most expensive in Darwin in some cases, due to the higher food costs there. Also, due to the high child care costs of Hobart, the costs of a three-year-old from a modest but adequate household (mother employed full-time) is greater there than in Sydney.

The cost of one child as a percentage of the household budget appears to be greater for modest but adequate households than for low cost households, although this is complicated by the cost of child care due to different labour force status. In general, the cost of one child as a percentage of the household budget increases with the age of the child. Low cost household three-year-olds consume the smallest percentage of their household’s budget (18-19 per cent), whereas 14-year-old boys from modest but adequate households consume the largest percentage of their household’s budget (33-37 per cent).

The tables also indicate that durables (with a lifetime of more than three years) in the low cost households account for $5 to $6 per week of the cost of children in December 1998.

The costs of children in couple-adult, private renter households have increased from February 1997 (SPRC’s original pricing) to December 1998. The smallest increases are at the low cost level and at modest but adequate level with mother not in the labour force (between a $3 to $5 per week increase). Increases in private rent have been the major factor, with small increases in the food, household goods and services and leisure budgets. On the other hand, the budget standards for modest but adequate households, with both parents in full-time employment, have had the greatest increases (from $5 to $19 per week). In this case, the increase in child care costs has been most significant.

5.2  Costs of more than one child

The costs of more than one child can be calculated in a parallel manner to that of one child. Accordingly Tables E.5 to E.8 in Appendix E provide the estimated costs of two, three and four children at December 1998 for each Australian capital city. As with the earlier tables, the costs in Sydney at February 1997 are also provided for comparison, as are the costs of children without durables at the low cost level. The calculations are based on adult-couple households renting privately. No costs of children estimates have been produced for home purchaser households. The main reason for this is that the housing cost for purchasers is too variable to be meaningful.

The description about the calculation of the cost of children estimates in Section 5.1 is also applicable here. Many of the above observations for the costs of one child are also relevant for the costs of more than one child.

The costs of two children appear to consume about 40 per cent of a household’s budget. Three children consume between 43 and 52 per cent of a household’s budget. Four children consume between 49 and 59 per cent of a household’s budget. However, this does not consider all labour force combinations.

At the low cost level, durables with a lifetime of more than three years constitutes about $10 per week for two children, up to $18 per week for three children and up to $22 per week for four children.

The estimated costs of more than one child in couple-adult, private renter households have increased from February 1997 to December 1998. As with one-child households, child care costs have been a significant component of this increase, but only effect modest but adequate households where both parents are employed full-time. In these cases, the increase is up to $44 per week for four children. For all other household types—that is, where the mother is not in the labour force—the increase is from $8 per week (two children) to $13 (four children).

Before examining the cost of children estimates in sole parent households, the above estimates are compared with those originally published by SPRC in its report (Saunders et al. 1998). The cost of children estimates in SPRC’s original report should be regarded as inaccurate and based on errors which have been subsequently been fixed. However, cautious readers may be suspicious about the effect of the adjustments that have been made to the budget standards (as described in Section 3.1). In making the comparisons, the modest but adequate (both parents employed full-time) estimates in panel one of Table 14.11 (Saunders et al. 1998, 594) should be compared with the Sydney February 1997 estimates in Table E.1. The low cost (mother not in the labour force, father unemployed) estimates in the second panel of Table 14.10 (Saunders et al. 1998, 593) should be compared with the Sydney February 1997 estimates in Table E.2.

The comparisons reveal that the revised estimates published here are greater than SPRC’s original estimates at the modest but adequate level by between $5 and $10 per week. The main reason for this is the additional leisure goods allocated to households with children. The SPRC had the presence of children resulting in less leisure goods (see Section 3.1.1). At the low cost level the cost of the two girls is slightly less ($3 to $4 per week), but the 14-year-old boy is slightly greater ($2 per week) than those originally estimated by SPRC. Again, the leisure adjustments are the main reason. However, in this case, the effect of additional leisure items has been ameliorated somewhat by restricting low cost leisure weights to those for the modest but adequate households. The SPRC had low cost unemployed households having greater leisure costs due to their increased leisure time. In contrast, it was argued that the increased leisure time did not need to incur extra cost (see Section 3.1.1). Two other main factors behind these changes are: the removal of occasional care for the three-year-old girl when the father was unemployed (see Section 3.1.3); and an error in the leisure weights for the couple with a six-year-old girl (see letter in Appendix B).

A much more significant observation to be made when comparing SPRC’s cost of children estimates (Saunders. et al. 1998) with those provided here, is this new work provides a significantly greater number of estimates involving a greater variety of household types. In particular, the new budget standard for a couple with a 10-year-old boy provides estimates of the cost of a 10-year-old boy that are far more accurate than those obtained by SPRC using regression (see Henman 1999b). Also, the estimates calculated here provide for households with labour force arrangements that were not provided by SPRC. The merits of the estimates provided here also include the effect of geography and the updating of the estimates to December 1998.

5.3  Costs of children in sole parent households

In a similar manner to the above calculations, Tables E.9 to E.11 present the estimated costs of children in sole parent households. Table E.9 presents costs for a sole parent in full-time employment at the modest but adequate level, while Tables E.10 and E.11 present costs for a sole parent who is not in the labour force, at both the low cost and the modest but adequate level respectively. It should be noted that a sole parent who is not in the labour force would be unable to achieve a modest but adequate living standard level without an independent income, such as child and/or spousal support. This scenario is useful for policy analysis and for assessing the differences between partnered and single households where one parent is not in the labour force. Sole parents who are not in the labour force are assumed to access concessions (for such things as pharmaceuticals, transport and energy), whereas employed sole parents—due to their independent income—are not likely to get access to such concessions.

As with earlier similar tables, these tables provide estimates for Sydney at February 1997 as well as for (low cost) households that do not incur household durable costs. The tables indicate that one child costs a sole parent between 24 and 32 per cent of the household budget, and two children cost between 42 and 50 per cent of the household budget.

The cost of one child to sole parents has risen from February 1997 to December 1998 by as little as $3 per week (low cost) and as much as $12 per week (modest but adequate household, mother employed full-time). The cost of two children has risen more; from as little as $8 per week (low cost) to as much as $21 per week (modest but adequate household, mother employed full-time). As with the earlier budgets, the main factors increasing the costs of children are child care and housing.

Unfortunately, due to SPRC’s household types, only the cost of a six-year-old girl for a sole parent can be compared with that for a couple. As a proportion of the household budget, children seem to cost more for sole parent households than for couple households. However, as an absolute dollar figure, a child in a sole parent household costs about $8 per week more for modest but adequate households (mother employed full-time), about $2 per week more for modest but adequate households (mother not in the labour force) and about $8 per week less for low cost households (mother not in the labour force). These differences are known as the cost of sole parenthood(Table E.14). The reasons for these differences were discussed earlier in Section 3.1.2.

5.4  Cost of sole parenthood

The cost of sole parenthood is not always a clearly defined concept. It can be thought of as the additional cost of being a sole parent, as compared with couples with children. It does not generally refer to the cost of setting up a sole parent household, or the transition costs associated with separation.

In this context, the cost of sole parenthood is precisely defined as the difference between the cost of children in a couple household and in a sole parent household. The SPRC’s original report found that such a measure was negative (Saunders et al. 1998, pp. 599–606), which was highly unusual and unexpected. Accordingly, SPRC recommended ‘extreme caution’ when considering its results. This conclusion from SPRC’s research was unfortunate as there is considerable interest in the costs of sole parenthood.

Since FaCS received SPRC’s report, a close examination has been undertaken of the reasons underlying SPRC’s result. As discussed earlier, there were several reasons for the result. Firstly, SPRC had the presence of children reducing leisure costs (Section 3.1.1). Secondly, sole parents were not allocated leisure activities with adults. In short, sole parents were treated as parents, but not as singles (see Section 3.1.2). In other words, sole parents have two inter-related identities—single adults and parents—which involve separate needs. SPRC considered only the latter and overlooked the former. This duality of sole parents became obvious when FaCS was constructing budget standards for non-resident (non-custodial) parents who have regular contact with (access to) their non-resident (non-custodial) children (Henman and Mitchell, forthcoming). Thirdly, (low and middle income) sole parents can access concessions on a variety of goods and services to which other households are not eligible. Fourthly, the difference method used in determining the cost of sole parenthood relies on the same living standard (and labour force) status of each of the four households involved: couple without children; couple with children; single adult; and sole parent. However, as SPRC was limited by the budget standards it had created, it was not able to provide an appropriate comparison with a single woman (not in the labour force) at the low cost level.

Of these factors, only a third are legitimate reasons for contributing to a negative cost of sole parenthood. Sections 3.1.1 and 3.1.2 above have described how the first and second issues were addressed. The fourth concern—unequal labour market comparisons—has been resolved by the construction of new household types, in particular a single low cost woman who is not in the labour force. Additional budget standards for modest but adequate household sole parents and singles (not in the labour force) extend the number of cost of sole parent estimates that can be given (Section 3.2). In addition, the calculation of the new estimates has been supplemented by a knowledge of the child care and transport-to-school costs which change due to labour force status. See Section 5.1 for a detailed discussion.

It is also unfortunate that the SPRC household budget standards only allow for the cost of sole parenthood to be estimated for one child, namely a six-year-old girl. SPRC’s two-child sole parent household (girl six, boy 10) is not comparable with the two-child couple household (girl six, boy 14). This restriction significantly limits our ability to know how our estimates are representative for children of other age groups and household sizes.

Table E.14 in Appendix E presents the estimated cost of sole parenthood for a six-year-old girl for different labour force and living standard combinations. For all except the last panel, the estimates assume that the male in the couple households is employed full-time. These results suggest that there is a positive cost of sole parenthood at the modest but adequate living standard, and a negative cost at the low cost standard. The range—from -$9 to $8 per week— starkly contrasts with SPRC’s original estimates (from -$16 to -$3 per week). They also vary only slightly on the basis of geography. The results are worthy of detailed examination.

The last panel provides the estimates of the cost of sole parenthood at the low cost living standard which has been derived from a comparison with a couple household where the male in the couple is unemployed. The panel indicates that the negative cost is constituted by negative costs in the energy, household goods and services and transport budgets. The main reason for these negative costs is concessions. The low cost household sole parent is assumed to hold a concession card that makes her eligible to energy, telephone, car registration, car licence and public transport concessions. These are the same for the scenario at the low cost level and male employed full-time (top panel in Table E.14). The only difference is that the transport budget is only slightly negative (-$1 compared with -$6 per week). The reason for this is the separate transport to school of the six-year-old girl. When a couple has the male employed full-time, he drops the child to school on the way to work. In contrast, the sole parent must make this trip separately, which amounts to about $5 per week in petrol costs and car wear and tear. However, as this would only occur for low cost households with this age child, the cost of sole parenthood for a girl three, boy 10 or boy 14 would not vary at the low cost level due to the labour force status of the adult male.

The second panel of Table E.14 presents the costs of sole parenthood for the modest but adequate level where the mother is employed full-time. Here the cost is positive ($8 per week), being made up of positive costs in the household goods and services and leisure budgets and a negative cost in the transport budget. The increases are due to child minding costs to undertake leisure activities and additional single adult leisure activities. The decrease in transport costs relates to the fact that couples spend more on car travel and public transport in coordinating their destinations. As the sole parent is employed full-time, she is assumed not to be eligible for pensioner concessions. In contrast, the third panel shows the costs of sole parenthood at the modest but adequate living standard where the mother is not in the labour force. Here the costs for the previous sole parent are ameliorated by access to concessions

when the mother becomes a sole parent.15 In addition to the concessions mentioned earlier, this sole parent also gets concessional pharmaceuticals in the health budget. At the low cost living standard, this additional concession did not appear because both sole parents and low-income couples get these concessions. Once again, the modest but adequate sole parent’s transport concessions are minimised by the additional cost of taking her child to school.

An observant reader may wonder why the additional adult leisure activities allocated to sole parents (Section 3.1.2) at the low cost level did not show up, whereas they did at the modest but adequate level. This results from a variety of factors, the most significant being the greater number and cost of additional adult leisure activities allocated to sole parents at the modest but adequate level than at the low cost level. Also, child minding (in the household goods and services budget) is assumed to cost modest but adequate household sole parents, but be free at the low cost level (Section 3.1.2).

Whilst these cost of sole parenthood estimates seem significantly more reasonable than those provided initially by SPRC, a final word of caution is required. Concessions that sole parents are assumed to access are provided by federal, state and local governments and by some private providers. SPRC calculated these concessions for Sydney. Unfortunately, as there is virtually no published information about pensioner concessions in other locations, the budget standards for other locations assume the same level of concession as that provided in Sydney. It is highly recommended that before these results are used, some attempt be made to assess pensioner concessions in other capital cities. Concessions that should be particularly investigated are for electricity, car registration, car third party person insurance, car licence and rates.

5.5  Regression models

As explained in Section 2, SPRC used a regression model to estimate budget standards for couple households with different children combinations (Saunders et al. 1998, pp. 609–614). This enabled the coverage of SPRC’s budget standards to be widened beyond the specific 46 different household types. A regression model is a statistical model which is used to estimate the effects of various independent variables on a dependent variable. The model is constructed on observations of the dependent variable, in this case SPRC’s original budget standards, and independent variables, that is, descriptors of SPRC’s household types.

Having amended and updated SPRC’s budget standards, as described above, this report undertakes a regression exercise similar to that undertaken by SPRC (Saunders et al. 1998). In creating the regression model, a slightly different set of independent variables have been used and some newly constructed budget standards have been added. Sole parent households have been included in the regression model.

Tables F.1 and F.2 of Appendix F provide the regression models for Sydney private renter households at December 1998 at the modest but adequate and low cost levels respectively. Tables F.3 and F.4 reproduce the regression model for the weighted capital city average budget standards. To date, no regression models have been constructed for home purchaser households.

The regression models’ accuracy in reflecting the budget standards is indicated by the extent of the difference between the actual budget standards and the predicted budget standards. This is shown in the final column in each table. The regression for the low cost standards is slightly better than those for the modest but adequate standard. Whilst it is interesting to compare the regression coefficients and estimated costs for the children and for sole parenthood respectively, it should not be concluded that discrepancies necessarily reflect poorly on the accuracy of the regression model. One must be aware that different regression variables may also pick up some of the cost of children, such as the cost of bedrooms.

The regression models have subsequently been used to estimate budget standards for different household types, including a household with five children. These estimates are provided in Tables F.5 to F.18 for both living standard levels and include both couple-adult and single-adult households with different labour force characteristics. These tables are also used to estimate the costs of children. The budget standards estimates obtained from the regression model (column two) and the resulting costs of children estimates (column four) are compared with the actual budget standards (column three) and costs of children obtained from the actual budget standards (column five) where they exist. As the cost of children is the difference between the budget standards for a household with children and for a household without children, it is particularly important that predicted budget standards for the latter is as close as possible to the original budget standards. Accordingly, column six provides the cost of children derived from subtracting the actual budget standards for a household without children from the predicted budget standards for a household with children. As can be seen, this approach generally produces a more accurate result than using entirely regression-derived budget standards (column four).

Due to the limited range of data, the regression model is not sufficiently sensitive to changes in the labour force status, particularly of the woman at the modest but adequate level. The regression model estimates the effect of the modest but adequate level woman leaving the labour force as approximately equal to the child care costs of a six-year-old girl. Accordingly, to construct budget standards for modest but adequate households—male employed full-time, female not in the labour force—using the regression model, requires the supplementation of the model with information about child care costs. In a similar fashion to the construction of Tables E.3 and E.6, the predicted budget standard obtained by the regression model has been adjusted by adding the cost of child care for a six-year-old girl and subtracting the cost of child care for the children in that household. This is also done for other household arrangements where the regression would not accurately pick up changed child care costs due to labour force status and household structure. These cases are indicated by an asterisk (*). The net cost of child care for many household combinations in December 1998 is provided in Tables E.12 and E.13 of Appendix E. Unfortunately, it has not been possible to estimate child care costs for all the household types in estimates using the regression. Accordingly, there are some blank spaces where these results have not been calculated. In contrast with some tables in Appendix E, there has been no adjustment for the effect of transporting the six-year-old girl to school.

The tables indicate that the budget standards and the costs of children obtained by regression are reasonably similar to the actual budget standards. In most cases, the regression estimates lie within one or two dollars of the actual estimates. There are a few occasions when the regression cost of children estimates are $4 per week less and one occasion where they are $3 per week more than the estimates obtained from actual budget standards. It should also be observed that when variations exist, the regression is more likely to underestimate, rather than overestimate, the budget standards and the derived costs of children.

The cost of children obtained from the regression models can also be compared with those obtained by intelligently adjusting the budget standard costs of children estimates by taking account of the differential impact of child care and school transport, as was done in some of the tables in Appendix E. Here, the regression estimates are not quite as accurate. Whilst they never overestimate the cost of children, they underestimate the costs in one case by $8 per week. Most estimates obtained by regression are within $3 per week of the actual estimates. Interestingly, the regression estimates for four children are always accurate.

5.6  Summary costs of children estimates

The above technical discussion about estimating the cost of children and the corresponding extensive range of tables in Appendices E and F would daunt even the most eager of readers. It is important to present the above detail to convince sceptics and experts of the processes undertaken in calculating the costs of children estimates. However, a summary of the results obtained is needed to assist readers make use of the data presented. Accordingly, Table 8 presents the weighted capital city average costs of children estimates for December 1998 ($ per week) for a variety of household combinations.

Table 8: Weighted capital city average costs of children estimates for December 1998—private renters—$/week

  Modest but adequate Low cost
Household composition Couple FF Couple FN Single F Single N Couple FN Couple UN Single N
One child
Girl 3 (G3) 183 101 172 103 87 79 81
Girl 6 (G6) 150 111 158 113 93 98 89
Boy 10 (B10) 173 135 181 135 111 111 102
Boy 14 (B14) 167 167 175 170 129 129 122
Two children
G3G3 360       140 132 139
G3G6 326 194 319 197 150 149 149
G3B10 359       195 194 194
G6B10 326 251 333 260 205 212 205
G6B14 322 283 330 285 225 230 224
B10B14 331 291 340 294 203 209 202
B14B14 328       223 229 222
Three children
G3G3G6 513       242 233 240
G3G6B10 501 312 484 314 263 262 262
G3B10B14 518       295 294 294
G6B10B14 485 413 495 416 305 311 303
G3G6B14 500 356 491 354 288 286 282
B10B10B14 506       316 323 315
B10B14B14 502       336 343 335
Four children
G3G6B10B14 659 467 665 469 362 360 362
G3G3G6G6 655       310 301 308
G6B10B14B14 655       438 444 437
B10B10B14B14 665       416 422 415
Five children
G3G3G6G6B10 829 489 849 490 423 415 422
G3G3G6B10B14 847       455 446 453
G6B10B10B14B14 818       518 524 516

Key: F—Full-time; N—Not in the labour force; U—Unemployed. Figures in bold have been obtained from actual budget standards (Appendix E), whilst the others have been undertaken from regression models (Appendix F)

Source: Author’s calculations

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6 Conclusion

The research presented here represents a considerable extension and development of SPRC’s indicative budget standards for Australia (Saunders et al. 1998). The work builds upon the extensive critical analysis undertaken by DSS and FaCS, some of which was published in the special edition of the Social Security Journal (1998/1). Accordingly, these developments contribute to the ongoing debate concerning the budget standards and their subsequent refinement that SPRC has repeatedly encouraged.

Ultimately, this research aims towards the acceptance and usefulness of budget standards for Australian social policy analysis. It is for this reason that SPRC’s budget standards were extended to other capital cities (Section 3.3), updated to the present (Section 4) and broadened to other household types and configurations (Sections 3.2 and 5.5). Whilst the focus of the work reported here has been on estimating the costs of children, the revised and extended budget standards also have broader social policy relevance. It is hoped that various individuals and organisations can make this work.

New research aims both to refine and test earlier research and to extend knowledge. In refining and testing earlier research, it is inevitable that the new, more sophisticated research replace the earlier crude research. In this case, it is hoped that the policy research community can agree that the costs of children estimates derived from SPRC’s budget standards—and the development reported here—replace the costs of children estimates derived by Lovering (1984). Clearly, this is only possible because the two studies are based on similar methodologies. Obviously Lee’s (1989) costs of children estimates can only be replaced by similar, more recent, expenditure-based research, such as Percival, Harding and McDonald (1999).

SPRC’s budget standards have proven themselves particularly useful in extending knowledge. Not only have they provided the basis for the development of geographically sensitive budget standards (Section 3.3), but they provide an intellectual framework and impetus to explore issues not previously considered. For example, it was only through trying to understand the apparent negative cost of sole parenthood that it was realised that sole parents have two identities—single adults and parents—both of which need expression. The budget standards also helped the identification of what factors in the costs of children change when their parents’ labour force status changes. Whilst the importance of child care is well known, the insight about occasional care and school transport (Section 5.1) is possibly new. Although the observation results from very specific assumptions in the budget standards, the observation inevitably leads one to ask whether this reflects a more widespread occurrence or is an unintended outcome of detailed budget standards.

Despite the possibilities research offers, it also is necessary to conclude with a word of caution. All research has its strengths and limitations. Accordingly, readers are counselled against taking the apparent accurate results as gospel. Indeed, it is hoped that the complex calculations required to derive the numbers warn readers of the results’ reliance on the underlying assumptions, which, of course, may be contestable. Ideally, the costs of children estimates and the budget standards reported here should be supplemented by other research using different methodologies and data sources.

Finally, the research reported here has highlighted Australia’s very limited range of data on the effect of geography on prices and relative needs of goods and services.

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Appendix A: Corrected budget standards for February 1997

Table A1: Corrected modest but adequate budget standards for February 1997 (as agreed with SPRC)

  Commodity group
Family type Housing  Energy Food Clothing HGS Health Transport Leisure Personal Total
H1a S Pri M 140.23 7.80 50.71 23.97 30.20 4.36 75.77 28.15 22.45 383.64
H1b S Pur M 227.46 8.24 50.71 23.97 34.05 4.36 75.77 28.15 22.45 475.17
H1d S(N) Pur M 227.46 8.24 50.03 17.91 34.05 4.36 63.68 38.71 18.72 463.17
H1e S(N) Pri M 140.23 7.80 50.03 17.91 30.20 4.36 63.68 38.71 18.72 371.65
H2a C Pur M 245.17 11.66 111.67 42.20 59.40 10.77 85.40 44.46 32.04 642.77
H2b C Pri M 140.23 10.72 111.67 42.20 36.99 10.77 85.40 43.78 32.04 513.80
H3a C+2 Pur M 268.97 15.16 196.91 71.88 131.85 16.05 91.13 66.56 38.76 897.28
H3b C+2 Pri M 213.21 15.38 196.91 71.88 109.59 16.05 91.13 65.92 38.76 818.84
H4a S+g6 Pur M 245.17 11.52 82.32 37.75 98.70 7.25 77.24 36.08 24.36 620.40
H4b S+g6 Pri M 169.67 10.13 82.32 37.75 76.63 7.25 77.24 36.01 24.36 521.38
H4e S(N)+g6 Pur M 245.17 9.78 81.64 31.69 63.02 5.19 65.29 46.47 20.63 568.87
H4f S(N)+g6 Pri M 169.67 8.39 81.64 31.69 40.95 5.19 65.29 46.40 20.63 469.85
H5a AS Own M 46.13 8.69 47.16 14.27 45.07 8.49 55.80 38.34 16.09 280.03
H6a AC Own M 47.72 10.36 95.49 24.61 47.88 16.00 56.15 63.89 25.59 387.68
H7a C(FF)+g6 Pur M 267.48 13.63 143.28 55.98 106.21 13.74 88.13 47.87 33.95 770.26
H7b C(FF)+g6 Pri M 170.06 13.05 143.28 55.98 82.82 13.74 88.13 47.19 33.95 648.19
H7f C(FN)+g6 Pur M 267.48 13.63 142.59 49.92 72.19 13.74 87.80 59.01 30.22 736.58
H7g C(FN)+g6 Pri M 170.06 13.05 142.59 49.92 48.79 13.74 87.80 58.16 30.22 614.34
H7j C(FP)+g6 Pur M 267.48 13.63 142.62 55.98 75.40 13.74 101.47 54.68 31.43 756.43
H7k C(FP)+g6 Pri M 170.06 13.05 142.62 55.98 52.01 13.74 101.47 54.03 31.43 634.39
H8a C+b14 Pur M 267.48 13.63 165.31 58.10 86.05 13.15 88.41 61.79 36.85 790.77
H8b C+b14 Pri M 170.06 13.05 165.31 58.10 63.45 13.15 88.41 61.14 36.85 669.53
H9a C+g3 Pur M 267.48 13.63 136.97 54.33 168.35 13.58 88.62 43.55 33.73 820.23
H9b C+g3 Pri M 170.06 13.05 136.97 54.33 126.58 13.58 88.62 42.86 33.73 679.77
H10a C+3 Pur M 270.37 16.68 222.21 84.01 249.61 18.78 100.75 66.26 40.25 1068.92
H10b C+3 Pri M 213.21 17.28 222.21 84.01 216.13 18.78 100.75 65.61 40.25 978.23
H11a C+4 Pur M 271.77 18.21 264.35 98.49 304.19 21.10 122.29 74.67 42.31 1217.38
H11b C+4 Pri M 213.21 19.17 264.35 98.49 275.65 21.10 122.29 74.05 42.31 1130.63
H12a S+2 Pur M 267.48 13.49 124.46 52.23 149.32 9.65 80.21 43.32 26.42 766.58
H12b S+2 Pri M 212.93 12.46 124.46 52.23 129.23 9.65 80.21 43.25 26.42 690.86
H13a C+b10 Pur M 267.48 13.63 153.82 56.68 114.72 13.17 87.72 49.33 34.37 790.92
H13b C+b10 Pri M 170.06 13.05 153.82 56.68 92.99 13.17 87.72 48.68 34.37 670.54
H14a Sm Pur M 227.46 8.24 60.96 18.23 34.05 6.49 75.55 32.52 9.93 473.42
H14b Sm Pri M 140.23 7.80 60.96 18.23 30.20 6.49 75.55 32.52 9.93 381.90

Source: Calculated by author from corrected SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; F=employed full-time; P=employed part- time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pur=home purchaser; Own=home owner;

Table A2: Corrected low cost budget standards for February 1997 (as agreed with SPRC)

  Commodity group
Family type Housing  Energy Food Clothing HGS Health Transport Leisure Personal Total
H1c S Pri L 123.67 7.31 39.04 18.08 24.23 3.12 50.32 20.57 6.91 293.25
H1f S(N) Pri L 123.67 7.31 39.04 14.01 24.23 3.12 46.59 20.39 6.55 284.92
H2c C Pri L 123.67 9.73 85.79 31.78 30.15 7.27 53.03 28.36 12.18 381.97
H3c C+2 Pri L 195.98 13.42 152.64 55.44 58.38 11.30 60.71 38.86 15.70 602.43
H4c S+g6 Pri L 155.87 7.40 63.87 26.71 32.18 5.19 48.53 23.92 7.65 371.33
H4d S+g6 Pub L 45.93 7.40 63.87 26.71 39.49 5.19 48.53 23.92 7.65 268.70
H5b AS Own L 46.13 8.20 37.27 13.03 37.24 7.05 38.48 22.02 5.52 214.94
H5c AS Pub L 39.26 5.56 37.27 13.03 23.67 7.05 38.48 20.99 5.52 190.83
H6b AC Own L 47.53 9.37 75.83 21.93 37.10 13.12 39.21 41.08 10.41 295.58
H6c AC Pub L 59.26 7.99 75.83 21.93 30.64 13.12 39.21 39.38 10.41 297.76
H7c C(UN)+g6 Pri L 155.87 11.58 110.63 40.41 38.65 9.42 57.94 33.59 12.92 471.01
H7d C(UU)+g6 Pri L 155.87 11.58 110.63 44.48 38.65 9.42 60.91 33.05 13.28 477.87
H7e C(UU)+g6 Pub L 69.13 11.58 110.63 44.48 46.93 9.42 60.91 32.95 13.28 399.31
H7h C(FN)+g6 Pri L 155.87 11.58 112.44 41.15 38.65 9.42 70.22 30.14 12.92 482.39
H7i C(FU)+g6 Pri L 155.87 11.58 112.44 45.22 38.65 9.42 73.94 30.07 13.28 490.48
H8c C+b14 Pri L 155.87 11.58 127.81 42.74 50.40 9.23 52.97 35.56 14.59 500.75
H9c C+g3 Pri L 155.87 11.58 105.31 38.24 43.93 9.00 53.18 29.64 12.94 459.69
H10c C+3 Pri L 196.37 14.82 172.15 65.98 71.48 12.95 72.87 38.17 16.63 661.41
H11c C+4 Pri L 196.37 16.22 204.61 79.02 83.41 14.85 78.08 44.15 17.94 734.65
H12c S+2 Pri L 195.98 9.25 96.33 39.76 48.97 7.17 50.61 29.19 8.97 486.22
H12d S+2 Pub L 52.93 9.25 96.33 39.76 58.55 7.17 50.61 29.19 8.97 352.74
H13c C+b10 Pri L 155.87 11.58 118.25 40.75 46.21 9.25 52.28 33.89 13.38 481.46
H14c Sm(F) Pri L 123.67 7.31 48.57 14.44 24.11 4.23 57.67 19.88 5.53 305.42
H14d Sm(U) Pri L 123.67 7.31 46.76 13.70 24.11 4.23 49.12 23.95 5.53 298.38

Source: Calculated by author from corrected SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; U=unemployed; F=employed full-time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pub=public housing; Own=home owner; L=low cost; HGS=household goods & services

Table A3: Corrected modest but adequate budget standards for February 1997 (as described in Section 3.1)

  Commodity group
Family type Housing  Energy Food Clothing HGS Health Transport Leisure Personal Total
H1a S Pri M 140.23 7.80 50.71 23.97 30.20 4.36 75.77 25.56 22.45 381.05
H1b S Pur M 227.46 8.24 50.71 23.97 34.05 4.36 75.77 25.56 22.45 472.58
H1d S(N) Pur M 227.46 8.24 50.03 17.91 34.05 4.36 63.68 36.12 18.72 460.58
H1e S(N) Pri M 140.23 7.80 50.03 17.91 30.20 4.36 63.68 36.12 18.72 369.06
H2a C Pur M 245.17 11.66 111.67 42.20 59.40 10.77 85.40 39.28 32.04 637.59
H2b C Pri M 140.23 10.72 111.67 42.20 36.99 10.77 85.40 38.60 32.04 508.62
H3a C+2 Pur M 268.97 15.16 196.91 71.88 131.85 16.05 91.13 72.15 38.76 902.86
H3b C+2 Pri M 213.21 15.38 196.91 71.88 109.59 16.05 91.13 71.51 38.76 824.43
H4a S+g6 Pur M 245.17 11.52 82.32 37.75 102.15 7.25 77.98 41.97 24.36 630.47
H4b S+g6 Pri M 169.67 10.13 82.32 37.75 80.09 7.25 77.98 41.90 24.36 531.45
H4e S(N)+g6 Pur M 245.17 9.78 81.64 31.69 66.47 5.19 66.02 52.57 20.63 579.16
H4f S(N)+g6 Pri M 169.67 8.39 81.64 31.69 44.41 5.19 66.02 52.50 20.63 480.14
H5a AS Own M 46.13 8.69 47.16 14.27 45.07 8.49 55.80 38.34 16.09 280.03
H6a AC Own M 47.72 10.36 95.49 24.61 47.88 16.00 56.15 63.89 25.59 387.68
H7a C(FF)+g6 Pur M 267.48 13.63 143.28 55.98 106.21 13.74 88.13 51.83 33.95 774.22
H7b C(FF)+g6 Pri M 170.06 13.05 143.28 55.98 82.82 13.74 88.13 51.15 33.95 652.15
H7f C(FN)+g6 Pur M 267.48 13.63 142.59 49.92 72.19 13.74 87.80 62.97 30.22 740.54
H7g C(FN)+g6 Pri M 170.06 13.05 142.59 49.92 48.79 13.74 87.80 62.12 30.22 618.30
H7j C(FP)+g6 Pur M 267.48 13.63 142.62 55.98 75.40 13.74 101.47 58.64 31.43 760.39
H7k C(FP)+g6 Pri M 170.06 13.05 142.62 55.98 52.01 13.74 101.47 57.99 31.43 638.35
H8a C+b14 Pur M 267.48 13.63 165.31 58.10 86.05 13.15 88.41 65.75 36.85 794.73
H8b C+b14 Pri M 170.06 13.05 165.31 58.10 63.45 13.15 88.41 65.10 36.85 673.49
H9a C+g3 Pur M 267.48 13.63 136.97 54.33 168.35 13.58 88.62 43.87 33.73 820.55
H9b C+g3 Pri M 170.06 13.05 136.97 54.33 126.58 13.58 88.62 43.18 33.73 680.09
H10a C+3 Pur M 270.37 16.68 222.21 84.01 249.61 18.78 100.75 76.15 40.25 1078.82
H10b C+3 Pri M 213.21 17.28 222.21 84.01 216.13 18.78 100.75 75.50 40.25 988.13
H11a C+4 Pur M 271.77 18.21 264.35 98.49 304.19 21.10 122.29 83.50 42.31 1226.21
H11b C+4 Pri M 213.21 19.17 264.35 98.49 275.65 21.10 122.29 82.89 42.31 1139.46
H12a S+2 Pur M 267.48 13.49 124.46 52.23 152.77 9.65 80.95 50.71 26.42 778.16
H12b S+2 Pri M 212.93 12.46 124.46 52.23 132.69 9.65 80.95 50.64 26.42 702.43
H13a C+b10 Pur M 267.48 13.63 153.82 56.68 114.72 13.17 87.72 53.29 34.37 794.88
H13b C+b10 Pri M 170.06 13.05 153.82 56.68 92.99 13.17 87.72 52.64 34.37 674.50
H14a Sm Pur M 227.46 8.24 60.96 18.23 34.05 6.49 75.55 29.93 9.93 470.83
H14b Sm Pri M 140.23 7.80 60.96 18.23 30.20 6.49 75.55 29.93 9.93 379.31

Source: Calculated by author from corrected SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; F=employed full-time; P=employed part- time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pur=home purchaser; Own=home owner; M=modest but adequate; HGS=household goods & services

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Appendix B: Letters to SPRC regarding leisure and spreadsheet corrections

Professor Peter Saunders
Director
Social Policy Research Centre
University of New South Wales NSW 2052

Cc Dr Michael Bittman

Dear Professor Saunders

Budget Standards—Leisure budget

I write to seek your views on the department’s approach to the further development and refinement of the leisure budgets that were prepared by SPRC as part of the Budget Standards Project.

The leisure budgets, as described in Chapter 10 of the budget standards project report, are partly based on the time-use model developed by Michael Bittman. Whilst some of the leisure budget standards make normative judgements about goods allocation (for example television, video recorder, children’s toys), there are a number of goods and services which are weighted by the leisure-time weights calculated using the time-use model. These items include books, newspapers, photographs, video hire, CDs and swimming.

As expressed during the development of the budget standards, the department has some methodological concerns about the way in which the weights are used. Of particular concern is the approach’s impact on the estimation of the costs of children.

Essentially, the time-use model estimates adult time-use patterns for different types of leisure (active, passive, social, gardening, other) and how leisure time changes with labour force status and household composition. For example, most categories of leisure time for adults decrease due to employment and the presence of children. This is to be expected. The department is concerned, however, that the budget standards use these changes in weights to specify the differential use of such things as video hire, photographs and CDs. In other words, having children decreases the amount of video hire, photographs and CDs which a household consumes. This is counter-intuitive. Rather, what would be expected is that the amount of adult-related video hire, etc would decrease, but there would be additional video hire for the children. As a consequence, for items such as video hire, photographs and CDs, the effect of children is reduced expenditure! (This, in turn, reduces the estimates of the costs of children.) I would think that SPRC would agree with the department that this situation is unrealistic and should be addressed through a refinement of the leisure budget standards.

There is a second, related area of the leisure budgets that the department would like to see addressed. Unemployment and non-attachment to the labour force increases certain types of leisure time. This, combined with the different labour force status of most low cost households compared with modest but adequate households, leads to the allocation of more video hire, photographs and CDs, etc for low cost households. On the one hand, this may seem a reasonable result. However, an alternative, normative, approach is to fix the allocation of these items despite labour force status. This would be done on the basis that more leisure time does not necessarily mean a need for increased video hire and CDs, etc, in short, more leisure expenditure. Rather, people watch more television, listen to the radio, play taped programs, use the library and listen to the same CDs more often if they have more leisure time. Such an approach is used in the leisure budgets for the allocation of swimming. The additional swimming for unemployed, low cost households is treated as free (that is in the river, or longer visits to the pool etc), rather than in increased pool entrance fees. The net effect of these assumptions is to reduce the estimation of the cost of employment and to narrow the distinction between the low cost and modest but adequate living standard levels. Again, this suggests that there is some justification for reassessing some of the details of the leisure budgets.

The department proposes the following approach to address the above issues. For households with children, it is proposed that a normatively-defined amount of additional leisure items be allocated for the first child and for each additional child. As a first approximation, the following is suggested.

Leisure adjustment variables (items/year) Additional leisure items for households with a child Additional leisure items for each additional child
Magazines 2 1
Video tape rental 10 2
Blank video cassette tapes 2 1
Blank cassette tapes 1 1
CDs 3 1
Camera products (album, film, etc) 2 1

However, there is some uncertainty about the level of additional leisure items for a three-year- old girl. Some items, such as magazines, may not be relevant to a three-year-old. Whilst there are several approaches, involving adjustments to the above table, to deal with the (perhaps) smaller needs of a three-year-old, for simplicity, it is recommended that no such adjustments be made.

With regard to the differential rates of leisure items for labour force status, it is proposed that the swimming model be followed for the following items: magazines, newspapers, video hire, blank video and audio tape, CDs and camera products. In other words, the allocation of these items for low cost households would be fixed to the number of items for the similar modest but adequate household.

The department is currently undertaking policy research using the budget standards. We are also aware of the broader interest in the costs of children by the public and organisations such as the Australian Institute of Family Studies. Consequently, it is sensible that an agreed approach be devised in the near future to address what are clearly problematic assumptions in the budget standards. I would, therefore, be pleased to hear your attitude to both the broad and detailed elements of the above proposed approach to the leisure budgets’ refinement.

Finally, the department and SPRC have agreed that the budget standards produce unrealistic estimates of the cost of sole parenthood. For example, page 606 of the budget standards report states that ‘the BSU budget standards do not provide an adequate basis for estimating the cost of sole parenthood’. In making the above changes, it is pertinent that this problem not be further exacerbated. The department believes that the suggested amendments above do not create further problems for the estimates of the costs of sole parenthood. However, should you think that there are further problems, please advise us accordingly.

Should you wish to discuss details of these proposals, the contact in this branch is Paul Henman (Phone 02 6244 7094).

Yours sincerely

Chris Foster
Assistant Secretary
Strategic Analysis and Evaluation Branch

21 December 1998


 

Professor Peter Saunders
Director
Social Policy Research Centre
University of New South Wales NSW 2052

Dear Professor Saunders

BUDGET STANDARDS—CORRECTIONS OF SPREADSHEET ERRORS

I wish to formally advise you and the Budget Standards Unit of some significant errors in the budget standards spreadsheets which have been detected and rectified.

  • The Household Goods and Services budgets failed to include additional childcare costs (before and after school care and vacation care) for the 10-year-old boy in the four-child household. The correction of this adds $45 per week to households H11a and H11b.
  • Weekly childcare subsidy calculations in the Household Goods and Services budgets have been incorrectly calculated. Whilst corrections have a varied effect, ranging from $1.51 reduction for household H10b to a $10.44 increase for household H10a.
  • The male active leisure weight for households H7a and H7b has been found to be incorrect. When corrected, the leisure budgets for these households reduce by just over $5 per week. This has a flow-on effect of reducing the cost of a six-year-old girl at the modest but adequate level by the same amount.

Paul Henman and Marilyn McHugh are agreed that these were errors in the spreadsheets and have accordingly jointly corrected them in the FaCS and SPRC spreadsheets respectively.

Finally, I would be pleased to know your response to my December 1998 letter regarding the department’s suggestion for improving the leisure budgets to more realistically reflect the costs of children and the nature of the low cost living standard.

Yours sincerely

Chris Foster
Assistant Secretary
Strategic Policy and Analysis Branch

April 1999

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Appendix C: Categorisation of budget standards into CPI sub-components

The following table lists the categories in which all items in SPRC’s budget standards were grouped. Because of some changes in the ABS CPI categorisation, there was a need to reconstruct some categories for updates after June 1998.

Italicised items have been adjusted to take account of geographical variations in needs and prices in order to create budget standards for different locations.

Table C1: The breakdown of SPRC’s budget standards into CPI sub-components

Budget standard component CPI category CPI sub-category
(12th series)
CPI sub-category
(13th series)
Housing Housing—Rents Private rents
Public rents
Private rents
Public rents
Housing—Home ownership Mortgage capital Mortgage interestRates
Repairs
House insurance
Mortgage capital Mortgage interestRates
Water / sewerage
Repairs
House insurance
Household equipment & operation —Household services & supplies Contents insurance Contents insurance
Energy Household equipment & operation —Fuel and light (12th Series)
Housing—utilities (13th Series)
Electricity Electricity
Food Tobacco & alcohol—alcoholic drinks Beer
Wine
Beer
Wine
Food—Dairy products (& related) Dairy products Dairy products
Food—Cereal products Cereal products Cereal products
Food—Meat & seafoods Meat & seafoods Meat & seafoods
Food—Fresh fruit & vegetables Fresh fruit
Fresh potatoes
Fresh vegetables
Fresh fruit
Fresh vegetables
Food—Processed fruit & vegetables Processed fruit
Fruit juice
Processed vegetables
Processed fruit
Fruit juice
Processed vegetables
Food—Soft drinks, ice cream & confectionery Soft drinks, ice cream,
confectionery
Soft drinks, ice cream,
confectionery
Food—Meals out and take away foods Take away Take away
Food—Other food Eggs
Sugar
Jams, honey, spreads
Tea, coffee, etc
Sauces, spices, etc
Margarine
Cooking oils and fats
Other foods
Eggs
Jams, honey, spreadsTea, coffee, etc

Food additives
Fats & oils
Other foods
Food—All foods All foods All foods
Clothing Clothing Clothing Clothing
Household goods and services Household equipment & operation Furniture Furniture
(HE&O)—Furniture & floor coverings Floor coverings Floor coverings
HE&O—Household textiles Textiles Textiles
HE&O—Appliances Appliances Appliances
HE&O—Household utensils & tools Utensils & tools
Cleaning agents
Utensils & tools
Cleaning agents
HE&O—Household supplies & services
(12th series)
Paper Non-durables, house
supplies
HE&O—Household supplies Non-durables  
HE&O—Household services (13th series) StationeryWatches & clocks
Vet
Pet foods
Travel goods
Appliance repairs
Stationery
Vet
Pet foods
Travel goods
Appliance repairs
HE&O—Postal and communication services Post
Telephone
Post
Telephone
Housing—House repairs and maintenance Household repairs & maintenance Household repairs & maintenance
Transportation—Private motoring Automotive fuel Automotive fuel
Housing—Home ownership Local government charges Local government charges
Recreation & education—books,newspapers & magazines Books, newspapers and magazines Books, newspapers and magazines
Recreation & education—education & child care Education
Child care
Child care subsidies
Education
Child care
Child care subsidies
Health care Health & personal care—health services Medical services
Optical services
Dental services
Medical services
Optical services
Dental services
Health & personal care—personal care products Pharmaceuticals
Personal products
Pharmaceuticals
Personal products
Transport Transportation—private motoring Cars
Fuel
Insurance
Charges
Tyres
Service, repairs & parts
Cars
Fuel
Insurance
Charges
Parts
Service & repairs
Transportation—urban transport fares Fares Fares
Leisure Recreation & education—Books,newspapers & magazines Books, newspapers & magazines Books
Magazines & newspapers
Recreation & education—recreational goods (12th series) Video & sound equipment Audio, video & computer equipment
Recreation & education—recreation
(13th series)
Records, cassettes and tapes
Sports, photographic& toys
Audio, visual & computing media and services
Sports equipment
Recreation & education—recreational services (12th series) Photographic services
Entertainment
Toys, etc.
Sports participation
Recreation (13th series)   Other recreation
Recreation & education—holiday travel & accommodation Holiday in Australia Domestic holiday
Housing—home ownership House maintenance House maintenance
Food—all groups Food Food
Personal care Health & personal care—personal care products Toiletries, etc. Toiletries, etc.
Health & personal care—hairdressing services Hairdressing Hairdressing
HE&O—household supplies & services (12th series) Watches & clocks Watches
Clothing—clothing accessories, supplies & services (13th series)    

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Appendix D: Budget standards for December 1998

Table D1: Sydney modest but adequate budget standards updated using CPI sub-components

Household type Feb-97 Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
H1a S Pri M 381.05 382.23 382.67 384.99 387.08 390.29 393.09 395.34 398.02
H1b S Pur M 472.58 459.65 454.30 448.53 449.21 451.65 453.43 453.47 455.76
H1d S(N) Pur M 460.58 447.84 442.77 436.98 438.00 440.51 376.35 442.60 445.04
H1e S(N) Pri M 369.06 370.42 371.14 373.44 375.87 379.15 334.75 384.48 387.30
H2a C Pur M 637.59 624.92 618.72 614.27 615.76 619.13 622.25 623.47 627.16
H2b C Pri M 508.62 509.61 509.16 512.03 514.92 519.07 522.89 526.13 530.62
H3a C+2 Pur M 902.86 889.92 883.37 880.00 885.26 890.39 895.55 898.41 905.40
H3b C+2 Pri M 824.43 826.49 826.38 831.45 838.68 845.70 852.24 857.64 866.21
H4a S+g6 Pur M 630.47 618.27 613.85 610.21 614.20 617.93 621.30 622.39 625.86
H4b S+g6 Pri M 531.45 533.25 534.81 538.86 544.49 549.45 553.84 557.18 561.75
H4e S(N)+g6 Pur M 579.16 566.41 561.01 556.48 558.23 560.82 563.92 565.10 568.24
H4f S(N)+g6 Pri M 480.14 481.38 481.98 485.13 488.52 492.34 496.46 499.90 504.13
H5a AS Own M 280.03 279.53 279.98 281.66 283.07 284.24 286.65 288.23 289.27
H6a AC Own M 387.68 387.25 387.05 389.42 391.82 393.95 397.38 400.00 402.71
H7a C(FF)+g6 Pur M 774.22 761.35 755.70 752.13 756.47 761.07 765.55 767.47 772.65
H7b C(FF)+g6 Pri M 652.15 653.82 654.25 658.65 664.60 670.42 675.81 679.97 686.26
H7f C(FN)+g6 Pur M 740.54 727.31 721.02 716.50 718.92 722.52 726.57 728.45 733.52
H7g C(FN)+g6 Pri M 618.30 619.60 619.41 622.85 626.88 631.70 636.66 640.78 646.95
H7j C(FP)+g6 Pur M 760.39 747.13 740.95 736.56 739.05 742.69 746.71 748.54 753.56
H7k C(FP)+g6 Pri M 638.35 639.63 639.54 643.11 647.22 652.07 657.00 661.07 667.20
H8a C+b14 Pur M 794.73 781.12 773.98 769.53 772.20 776.04 780.12 782.54 788.18
H8b C+b14 Pri M 673.49 674.43 673.36 676.88 681.17 686.23 691.22 695.89 702.61
H9a C+g3 Pur M 820.55 808.88 805.08 803.18 811.27 817.92 823.53 825.16 830.51
H9b C+g3 Pri M 680.09 682.68 684.41 689.94 698.46 705.74 711.91 715.78 722.10
H10a C+3 Pur M 1078.82 1067.31 1063.77 1063.43 1076.16 1084.62 1092.01 1095.50 1104.26
H10b C+3 Pri M 988.13 991.49 994.14 1001.94 1016.14 1026.23 1034.87 1040.87 1051.19
H11a C+4 Pur M 1226.21 1215.07 1212.10 1212.79 1228.56 1238.37 1247.13 1251.24 1261.70
H11b C+4 Pri M 1139.46 1143.27 1146.73 1155.74 1173.44 1185.14 1195.29 1201.86 1214.03
H12a S+2 Pur M 778.16 765.90 761.81 758.90 765.79 770.71 775.51 777.23 782.55
H12b S+2 Pri M 702.43 705.25 707.63 713.19 722.08 728.90 735.08 739.34 746.25
H13a C+b10 Pur M 794.88 781.97 776.36 772.87 777.81 782.45 787.23 789.34 795.07
H13b C+b10 Pri M 674.50 676.14 676.57 681.06 687.62 693.48 699.16 703.52 710.32
H14a Sm Pur M 470.83 457.66 452.45 446.54 447.17 449.64 451.46 451.68 453.98
H14b Sm Pri M 379.31 380.24 380.82 383.00 385.03 388.28 391.12 393.55 396.23

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; F=employed full-time; P=employed part- time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pur=home purchaser; Own=home owner; M=modest but adequate

Table D2: Sydney low cost budget standards updated using CPI sub-components

Household type Feb-97 Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
H1c S Pri L 289.18 290.42 290.86 293.16 294.77 297.57 300.12 302.16 304.25
H1f S(N) Pri L 281.03 282.30 282.80 285.05 286.74 289.55 292.09 294.12 296.24
H2c C Pri L 376.50 377.52 377.03 379.79 381.86 385.39 388.82 391.76 395.17
H3c C+2 Pri L 599.76 601.48 600.53 604.48 608.02 613.27 618.73 623.83 630.72
H4c S+g6 Pri L 371.24 372.74 372.92 375.72 377.77 381.18 384.54 387.37 390.72
H4d S+g6 Pub L 268.61 268.62 267.08 268.52 269.25 270.38 273.44 275.21 276.76
H5b AS Own L 214.94 215.07 215.42 217.09 217.68 219.05 221.35 222.37 223.05
H5c AS Pub L 190.83 190.91 190.10 191.12 191.83 192.96 195.65 196.88 197.60
H6b AC Own L 295.58 295.67 295.30 297.46 298.77 300.96 304.09 306.03 308.06
H6c AC Pub L 297.76 297.77 296.22 297.80 299.18 301.22 305.45 307.49 309.57
H7c C(UN)+g6 Pri L 467.25 468.56 467.94 471.20 473.74 477.95 482.23 485.96 490.64
H7d C(UU)+g6 Pri L 474.66 475.94 475.28 478.58 481.07 485.26 489.54 493.28 497.94
H7e C(UU)+g6 Pub L 396.20 396.00 393.60 395.56 396.73 398.67 403.42 406.11 408.95
H7h C(FN)+g6 Pri L 482.08 483.37 482.86 486.11 488.66 492.89 497.20 500.91 505.59
H7i C(FU)+g6 Pri L 490.24 491.48 490.92 494.22 496.69 500.92 505.23 508.95 513.61
H8c C+b14 Pri L 497.09 498.38 497.53 500.89 504.01 508.49 513.12 517.43 523.01
H9c C+g3 Pri L 448.81 450.21 449.59 452.75 455.19 459.33 463.52 467.17 471.66
H10c C+3 Pri L 654.71 656.27 654.96 659.03 662.67 667.94 673.64 679.30 686.78
H11c C+4 Pri L 727.56 729.07 727.33 731.49 735.66 741.18 747.59 753.89 762.81
H12c S+2 Pri L 486.96 488.94 489.06 492.46 495.51 499.72 504.15 507.92 513.08
H12d S+2 Pub L 353.49 353.59 351.59 353.22 354.63 355.97 359.88 362.29 365.20
H13c C+b10 Pri L 478.76 480.12 479.55 482.81 485.89 490.15 494.65 498.51 503.70
H14c Sm(F) Pri L 305.42 306.41 306.75 309.01 310.41 313.41 316.01 318.33 320.45
H14d Sm(U) Pri L 294.31 295.40 295.83 298.07 299.57 302.53 305.12 307.40 309.58

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; U=unemployed; F=employed full-time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pub=public housing; Own=home owner; L=low cost

Table D3: Sydney modest but adequate budget standards updated using CPI sub-components
(December 1998, $/week)

  Commodity group  
Household type Housing Energy Food Clothing HGS Health Transport Leisure Personal Total
H1a S Pri M 150.50 7.80 52.91 23.79 30.16 4.48 75.46 26.86 23.39 395.34
H1b S Pur M 204.23 8.24 52.91 23.79 34.12 4.48 75.46 26.86 23.39 453.47
H1d S(N) Pur M 204.23 8.24 52.24 17.77 34.12 4.48 63.69 38.29 19.56 442.60
H1e S(N) Pri M 150.50 7.80 52.24 17.77 30.16 4.48 63.69 38.29 19.56 384.48
H2a C Pur M 223.23 11.66 116.02 41.88 59.86 11.12 84.90 41.45 33.35 623.47
H2b C Pri M 150.50 10.72 116.02 41.88 36.89 11.12 84.90 40.75 33.35 526.13
H3a C+2 Pur M 246.34 15.16 204.02 71.35 139.82 16.57 90.57 74.28 40.31 898.41
H3b C+2 Pri M 228.84 15.38 204.02 71.35 116.98 16.57 90.57 73.63 40.31 857.64
H4a S+g6 Pur M 223.23 11.52 85.50 37.47 110.26 7.45 77.63 43.96 25.36 622.39
H4b S+g6 Pri M 182.10 10.13 85.50 37.47 87.64 7.45 77.63 43.90 25.36 557.18
H4e S(N)+g6 Pur M 223.23 9.78 84.83 31.46 67.86 5.45 65.54 55.43 21.52 565.10
H4f S(N)+g6 Pri M 182.10 8.39 84.83 31.46 45.24 5.45 65.54 55.37 21.52 499.90
H5a AS Own M 48.72 8.69 49.22 14.16 45.35 8.94 55.58 40.73 16.84 288.23
H6a AC Own M 50.40 10.36 99.42 24.43 48.07 16.82 55.91 67.88 26.72 400.00
H7a C(FF)+g6 Pur M 244.76 13.63 148.61 55.57 113.31 14.17 87.60 54.51 35.32 767.47
H7b C(FF)+g6 Pri M 182.51 13.05 148.61 55.57 89.33 14.17 87.60 53.82 35.32 679.97
H7f C(FN)+g6 Pur M 244.76 13.63 147.93 49.55 72.83 14.17 87.64 66.46 31.48 728.45
H7g C(FN)+g6 Pri M 182.51 13.05 147.93 49.55 48.85 14.17 87.64 65.60 31.48 640.78
H7j C(FP)+g6 Pur M 244.76 13.63 147.97 55.57 76.66 14.17 101.30 61.75 32.73 748.54
H7k C(FP)+g6 Pri M 182.51 13.05 147.97 55.57 52.67 14.17 101.30 61.10 32.73 661.07
H8a C+b14 Pur M 244.76 13.63 171.43 57.66 87.34 13.60 87.90 67.88 38.35 782.54
H8b C+b14 Pri M 182.51 13.05 171.43 57.66 64.17 13.60 87.90 67.22 38.35 695.89
H9a C+g3 Pur M 244.76 13.63 142.09 53.92 187.45 13.96 88.08 46.18 35.10 825.16
H9b C+g3 Pri M 182.51 13.05 142.09 53.92 141.60 13.96 88.08 45.48 35.10 715.78
H10a C+3 Pur M 247.82 16.68 230.09 83.39 278.08 19.32 99.90 78.37 41.84 1095.50
H10b C+3 Pri M 228.84 17.28 230.09 83.39 242.49 19.32 99.90 77.71 41.84 1040.87
H11a C+4 Pur M 249.30 18.21 273.54 97.76 339.99 21.74 120.77 86.00 43.94 1251.24
H11b C+4 Pri M 228.84 19.17 273.54 97.76 310.73 21.74 120.77 85.37 43.94 1201.86
H12a S+2 Pur M 244.76 13.49 128.95 51.84 167.24 9.94 80.55 52.98 27.46 777.23
H12b S+2 Pri M 228.54 12.46 128.95 51.84 146.68 9.94 80.55 52.91 27.46 739.34
H13a C+b10 Pur M 244.76 13.63 159.47 56.25 122.49 13.62 87.20 56.18 35.74 789.34
H13b C+b10 Pri M 182.51 13.05 159.47 56.25 100.16 13.62 87.20 55.52 35.74 703.52
H14a Sm Pur M 204.23 8.24 63.11 18.09 34.12 6.72 75.24 31.62 10.31 451.68
H14b Sm Pri M 150.50 7.80 63.11 18.09 30.16 6.72 75.24 31.62 10.31 393.55

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; F=employed full-time; P=employed part- time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pur=home purchaser; Own=home owner; M=modest but adequate; HGS=household goods & services

Table D4: Sydney low cost budget standards updated using CPI sub-components
(December 1998, $/week)

  Commodity group  
Household type Housing Energy Food Clothing HGS Health Transport Leisure Personal Total
H1c S Pri L 132.72 7.31 40.87 17.95 24.23 3.28 51.09 17.53 7.18 302.16
H1f S(N) Pri L 132.72 7.31 40.87 13.91 24.23 3.28 47.46 17.53 6.81 294.12
H2c C Pri L 132.72 9.73 89.34 31.54 30.08 7.63 53.75 24.33 12.64 391.76
H3c C+2 Pri L 210.35 13.42 158.35 55.03 59.11 11.87 61.28 38.14 16.27 623.83
H4c S+g6 Pri L 167.29 7.40 66.47 26.51 32.33 5.45 49.42 24.54 7.95 387.37
H4d S+g6 Pub L 47.63 7.40 66.47 26.51 39.83 5.45 49.42 24.54 7.95 275.21
H5b AS Own L 48.72 8.20 39.04 12.93 37.52 7.45 39.13 23.63 5.74 222.37
H5c AS Pub L 40.71 5.56 39.04 12.93 23.73 7.45 39.13 22.59 5.74 196.88
H6b AC Own L 50.20 9.37 79.15 21.76 37.22 13.84 39.85 43.85 10.80 306.03
H6c AC Pub L 61.40 7.99 79.15 21.76 30.59 13.84 39.85 42.12 10.80 307.49
H7c C(UN)+g6 Pri L 167.29 11.58 114.94 40.11 38.71 9.88 58.55 31.51 13.40 485.96
H7d C(UU)+g6 Pri L 167.29 11.58 114.94 44.15 38.71 9.88 61.46 31.51 13.77 493.28
H7e C(UU)+g6 Pub L 71.63 11.58 114.94 44.15 47.19 9.88 61.46 31.51 13.77 406.11
H7h C(FN)+g6 Pri L 167.29 11.58 116.78 40.84 38.71 9.88 70.92 31.51 13.40 500.91
H7i C(FU)+g6 Pri L 167.29 11.58 116.78 44.89 38.71 9.88 74.55 31.51 13.77 508.95
H8c C+b14 Pri L 167.29 11.58 132.75 42.43 50.97 9.70 53.74 33.84 15.13 517.43
H9c C+g3 Pri L 167.29 11.58 109.46 37.96 37.45 9.42 53.92 26.67 13.42 467.17
H10c C+3 Pri L 210.76 14.82 178.48 65.49 65.89 13.58 73.20 39.87 17.23 679.30
H11c C+4 Pri L 210.76 16.22 211.92 78.43 78.33 15.58 78.43 45.65 18.57 753.89
H12c S+2 Pri L 210.35 9.25 99.92 39.46 49.80 7.53 51.44 30.87 9.29 507.92
H12d S+2 Pub L 54.87 9.25 99.92 39.46 59.65 7.53 51.44 30.87 9.29 362.29
H13c C+b10 Pri L 167.29 11.58 122.78 40.45 46.77 9.71 53.04 33.03 13.86 498.51
H14c Sm(F) Pri L 132.72 7.31 50.31 14.33 24.10 4.43 58.23 21.18 5.72 318.33
H14d Sm(U) Pri L 132.72 7.31 48.46 13.59 24.10 4.43 49.89 21.17 5.72 307.40

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; U=unemployed; F=employed full-time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pub=public housing; Own=home owner; L=low cost; HGS=household goods & services

Table D5: Sydney low cost budget standards updated using CPI sub-components—excluding durables with lifetimes > three years (December 1998, $/week)

  Commodity group  
Household type Housing Energy Food Clothing HGS Health Transport Leisure Personal Total
H1c S Pri L 132.72 7.31 40.87 11.91 13.79 3.28 46.95 16.05 6.96 279.85
H1f S(N) Pri L 132.72 7.31 40.87 8.76 13.79 3.28 43.32 16.05 6.59 272.70
H2c C Pri L 132.72 9.73 89.34 21.17 18.27 7.63 49.60 22.98 12.32 363.76
H3c C+2 Pri L 210.35 13.42 158.35 45.54 39.42 11.87 56.76 34.54 15.70 585.95
H4c S+g6 Pri L 167.29 7.40 66.47 21.36 18.35 5.45 44.89 21.93 7.53 360.68
H4d S+g6 Pub L 47.63 7.40 66.47 21.36 24.83 5.45 44.89 21.85 7.53 247.42
H5b AS Own L 48.72 8.20 39.04 6.12 21.39 5.79 34.99 22.28 5.52 192.05
H5c AS Pub L 40.71 5.56 39.04 6.12 12.94 5.79 34.99 21.24 5.52 171.91
H6b AC Own L 50.20 9.37 79.15 9.91 18.45 10.52 35.71 42.50 10.48 266.28
H6c AC Pub L 61.40 7.99 79.15 9.91 18.37 10.52 35.71 40.78 10.48 274.29
H7c C(UN)+g6 Pri L 167.29 11.58 114.94 30.62 23.01 9.88 54.03 28.80 12.89 453.03
H7d C(UU)+g6 Pri L 167.29 11.58 114.94 33.78 23.01 9.88 56.94 28.80 13.26 459.46
H7e C(UU)+g6 Pub L 71.63 11.58 114.94 33.78 29.48 9.88 56.94 28.80 13.26 370.28
H7h C(FN)+g6 Pri L 167.29 11.58 116.78 32.80 23.01 9.88 66.40 28.80 12.89 469.41
H7i C(FU)+g6 Pri L 167.29 11.58 116.78 35.95 23.01 9.88 70.03 28.80 13.26 476.57
H8c C+b14 Pri L 167.29 11.58 132.75 32.94 34.58 9.70 49.59 31.52 14.76 484.70
H9c C+g3 Pri L 167.29 11.58 109.46 28.47 21.52 9.42 48.97 24.00 12.91 433.60
H10c C+3 Pri L 210.76 14.82 178.48 55.99 42.80 13.58 65.38 35.37 16.66 633.84
H11c C+4 Pri L 210.76 16.22 211.92 68.94 53.63 15.58 71.03 39.80 17.94 705.82
H12c S+2 Pri L 210.35 9.25 99.92 34.31 31.86 7.53 46.92 26.83 8.81 475.77
H12d S+2 Pub L 54.87 9.25 99.92 34.31 39.74 7.53 46.92 26.83 8.81 328.17
H13c C+b10 Pri L 167.29 11.58 122.78 30.96 31.61 9.71 48.89 30.19 13.28 466.29
H14c Sm(F) Pri L 132.72 7.31 50.31 11.43 13.66 4.43 54.08 19.70 5.50 299.15
H14d Sm(U) Pri L 132.72 7.31 48.46 9.26 13.66 4.43 45.74 19.70 5.50 286.78

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; U=unemployed; F=employed full-time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pub=public housing; Own=home owner; L=low cost; HGS=household goods & services

Table D6: Modest but adequate budget standards for Australian capital cities (December 1998, $/week)

  Commodity group  
Household type Housing Energy Food Clothing HGS Health Transport Leisure Personal Total
H1a S Pri M 395.34 344.32 341.48 323.74 333.84 339.97 384.63 343.58 357.68 339.40
H1b S Pur M 453.47 417.08 370.53 363.73 381.73 360.31 401.32 390.13 412.21 392.19
H1d S(N) Pur M 442.60 406.69 360.28 353.19 370.89 348.83 390.05 378.94 401.58 381.67
H1e S(N) Pri M 384.48 333.93 331.22 313.20 323.00 328.49 373.36 332.40 347.04 328.87
H2a C Pur M 623.47 585.30 537.13 529.91 555.79 533.86 579.59 561.24 581.47 561.09
H2b C Pri M 526.13 473.00 468.30 450.48 467.17 472.46 523.27 475.05 487.33 468.50
H3a C+2 Pur M 898.41 851.18 793.93 787.33 822.03 800.80 852.05 828.95 848.48 824.24
H3b C+2 Pri M 857.64 790.32 781.21 761.62 786.47 796.27 854.72 796.92 808.66 784.89
H4a S+g6 Pur M 622.39 583.00 533.93 529.33 549.78 534.44 568.58 560.65 579.25 558.31
H4b S+g6 Pri M 557.18 499.68 494.45 477.92 489.44 501.53 542.07 503.14 514.98 494.50
H4e S(N)+g6 Pur M 565.10 528.38 480.83 473.61 495.68 474.40 515.98 502.15 523.73 503.65
H4f S(N)+g6 Pri M 499.90 445.07 441.36 422.20 435.34 441.48 489.47 444.65 459.46 439.84
H5a AS Own M 288.23 288.74 283.38 285.28 291.76 292.65 296.84 291.91 288.08 288.01
H6a AC Own M 400.00 398.48 392.06 393.34 405.35 405.09 414.97 403.95 398.77 398.18
H7a C(FF)+g6 Pur M 767.47 721.87 666.67 660.28 689.01 669.33 714.93 698.18 718.59 694.86
H7b C(FF)+g6 Pri M 679.97 620.78 613.85 596.86 615.30 625.95 673.48 626.61 636.92 616.02
H7f C(FN)+g6 Pur M 728.45 686.09 631.60 623.09 653.39 628.21 680.65 658.58 681.54 658.78
H7g C(FN)+g6 Pri M 640.78 584.84 578.60 559.51 579.52 584.66 639.02 586.84 599.70 579.77
H7j C(FP)+g6 Pur M 748.54 705.75 651.09 642.96 673.12 648.67 700.44 678.82 701.38 678.49
H7k C(FP)+g6 Pri M 661.07 604.70 598.30 579.58 599.45 605.32 659.02 607.28 619.74 599.68
H8a C+b14 Pur M 782.54 738.69 683.43 675.03 708.20 682.05 737.74 712.38 734.79 711.62
H8b C+b14 Pri M 695.89 638.46 631.45 612.46 635.35 639.51 697.14 641.65 653.97 633.63
H9a C+g3 Pur M 825.16 774.45 718.02 715.61 740.22 729.73 762.82 756.53 773.05 747.76
H9b C+g3 Pri M 715.78 653.01 645.22 631.16 646.47 663.63 702.21 662.91 670.47 648.48
H10a C+3 Pur M 1095.50 1039.09 978.52 978.15 1009.70 1003.81 1036.33 1027.43 1039.72 1012.65
H10b C+3 Pri M 1040.87 965.13 952.67 938.99 961.11 985.20 1026.34 981.60 986.49 960.11
H11a C+4 Pur M 1251.24 1190.93 1127.52 1129.68 1163.70 1162.70 1191.87 1183.89 1192.94 1164.65
H11b C+4 Pri M 1201.86 1121.73 1106.07 1095.49 1119.64 1149.78 1186.06 1143.51 1144.61 1116.83
H12a S+2 Pur M 777.23 730.52 674.21 670.20 694.73 680.61 716.41 708.21 727.29 703.05
H12b S+2 Pri M 739.34 672.08 664.53 647.15 661.81 678.49 721.71 678.59 690.17 666.30
H13a C+b10 Pur M 789.34 743.43 687.91 681.59 711.19 691.09 737.67 719.83 740.26 716.45
H13b C+b10 Pri M 703.52 644.04 636.80 619.86 639.20 649.47 697.95 649.97 660.29 639.31
H14a Sm Pur M 451.68 415.14 368.38 361.96 380.18 357.84 400.63 387.59 410.34 390.27
H14b Sm Pri M 393.55 342.38 339.33 321.98 332.29 337.50 383.94 341.05 355.80 337.48

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; F=employed full-time; P=employed part- time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pur=home purchaser; Own=home owner; M=modest but adequate

Table D7: Low cost budget standards for Australian capital cities (December 1998, $/week)

Household type Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra Weighted average Non-Sydney average
H1c S Pri L 302.16 257.94 254.69 239.92 247.92 252.02 292.85 256.39 269.24 253.26
H1f S(N) Pri L 294.12 249.98 246.85 231.94 239.89 243.86 284.67 248.27 261.25 245.29
H2c C Pri L 391.76 345.52 340.87 326.15 339.57 342.12 389.48 346.22 357.78 341.28
H3c C+2 Pri L 623.83 564.75 556.88 538.53 560.25 561.61 625.21 566.40 580.43 559.36
H4c S+g6 Pri L 387.37 337.55 333.79 317.02 327.96 331.80 378.10 336.22 350.46 332.55
H4d S+g6 Pub L 275.21 274.52 269.12 271.00 279.83 279.82 286.16 278.25 274.56 274.24
H5b AS Own L 222.37 222.98 217.62 220.08 225.31 225.46 230.27 225.59 222.23 222.16
H5c AS Pub L 196.88 196.50 192.46 194.12 199.28 198.94 204.23 199.10 196.34 196.09
H6b AC Own L 306.03 304.73 298.38 300.58 310.39 308.90 319.72 309.24 304.85 304.28
H6c AC Pub L 307.49 305.68 300.04 301.81 311.56 309.80 320.87 310.16 306.11 305.44
H7c C(UN)+g6 Pri L 485.96 434.75 428.70 412.52 428.96 431.64 484.12 435.74 448.24 429.94
H7d C(UU)+g6 Pri L 493.28 442.00 435.88 419.79 436.28 439.06 491.54 443.12 455.52 437.20
H7e C(UU)+g6 Pub L 406.11 403.97 396.21 398.77 413.14 412.08 424.59 410.14 404.61 403.88
H7h C(FN)+g6 Pri L 500.91 449.66 443.54 427.48 443.89 446.61 499.17 450.73 463.17 444.85
H7i C(FU)+g6 Pri L 508.95 457.61 451.37 435.46 451.93 454.78 507.35 458.85 471.15 452.81
H8c C+b14 Pri L 517.43 465.18 458.77 442.41 460.98 462.00 518.08 466.61 479.12 460.53
H9c C+g3 Pri L 467.17 416.13 410.41 394.12 410.03 412.59 464.80 416.93 429.58 411.33
H10c C+3 Pri L 679.30 619.74 610.42 592.68 616.65 617.78 683.68 622.31 635.53 614.28
H11c C+4 Pri L 753.89 693.61 682.83 665.26 692.59 692.90 762.20 696.98 709.62 688.14
H12c S+2 Pri L 507.92 451.03 445.88 426.84 441.63 445.40 500.04 449.92 465.80 445.36
H12d S+2 Pub L 362.29 361.01 353.96 356.08 368.36 367.75 377.27 365.62 361.19 360.66
H13c C+b10 Pri L 498.51 447.07 441.06 424.66 441.76 443.96 497.33 448.03 460.68 442.32
H14c Sm(F) Pri L 318.33 273.26 270.19 255.70 264.35 268.32 310.37 272.15 285.07 268.92
H14d Sm(U) Pri L 307.40 262.47 259.71 244.82 253.45 257.23 299.11 261.08 274.23 258.14

Source: Calculated by author using adjusted SPRC budget standards spreadsheets

Codes: S=single female; C=couple; A=aged; Sm=single male; N=not in the labour force; U=unemployed; F=employed full-time; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pri=private rental; Pub=public housing; Own=home owner; L=low cost

Figure D1: Variation in updated budget standards from changes in CPI (fixed household type)

Graph showing variation in updated budget standards from changes in CPI (retired households)

Figure D2: Variation in updated budget standards from changes in CPI (retired households)

Figure D3: Variation in updated budget standards from changes in CPI (household size, low cost, private renters)

Graph showing variation in updated budget standards from changes in CPI (household size, low cost, private renters)

Figure D4: Variation in updated budget standards from changes in CPI (household size, modest but adequate, private renters)

Graph showing variation in updated budget standards from changes in CPI (household size, modest but adequate, private renters)

Figure D5: Variation in updated budget standards from changes in CPI (household size, modest but adequate, purchasers)

Graph showing variation in updated budget standards from changes in CPI (household size, modest but adequate, purchasers)

Figure D6: Variation in updated budget standards from changes in CPI (single adult, modest but adequate, private renters)

Graph showing variation in updated budget standards from changes in CPI (single adult, modest but adequate, private renters)

Figure D7: Variation in updated budget standards from changes in CPI (single adult, low cost, private renters)

Graph showing variation in updated budget standards from changes in CPI (single adult, low cost, private renters)

Figure D8: Variation in updated budget standards from changes in CPI (one child, modest but adequate, private renters)

Graph showing variation in updated budget standards from changes in CPI (one child, modest but adequate, private renters)

Figure D9: Variation in updated budget standards from changes in CPI (one child, low cost, private renters)

Graph showing variation in updated budget standards from changes in CPI (one child, low cost, private renters)

Figure D10: The effect of geography on one-child sole parent households (December 1998)

Graph showing the effect of geography on one-child sole parent households (December 1998)

[ Return to Top Return to Section ]

Appendix E: Costs of children estimates

Table E1: Cost of one child—modest but adequate budget standards—private rental—man and woman employed full-time—December 1998—$/week

Girl, Age 3: (H9b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
30 2 25 12 90 3 3 5 2 171 25%
Sydney 32 2 26 12 105 3 3 5 2 190 26%
Melbourne 29 3 25 12 98 3 3 5 2 180 28%
Brisbane 29 2 25 12 97 3 3 5 2 177 27%
Perth 28 3 27 12 97 3 3 5 2 179 28%
Adelaide 28 3 25 12 101 3 3 5 2 181 29%
Canberra 29 3 26 12 106 3 3 5 2 188 28%
Hobart 28 3 26 12 109 3 3 5 2 191 29%
Darwin 30 3 29 12 93 3 3 5 2 179 25%
Weighted average 30 3 26 12 101 3 3 5 2 183 27%
Non-Sydney av. 29 3 25 12 99 3 3 5 2 180 28%

Girl, Age 6: (H7b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
30 2 32 14 46 3 3 13 2 144 22%
Sydney 32 2 33 14 52 3 3 13 2 154 23%
Melbourne 29 3 32 14 50 3 3 13 2 148 24%
Brisbane 29 2 31 14 49 3 3 13 2 146 24%
Perth 28 3 34 14 49 3 3 13 2 148 24%
Adelaide 28 3 31 14 51 3 3 13 2 146 25%
Canberra 29 3 32 14 53 3 3 13 2 152 24%
Hobart 28 3 33 14 54 3 3 13 2 153 25%
Darwin 30 3 36 14 48 3 3 13 2 150 22%
Weighted average 30 3 32 14 51 3 3 13 2 150 23%
Non-Sydney av. 29 3 32 14 50 3 3 13 2 148 24%

Boy, Age 10: (H13b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
30 2 42 14 56 2 2 14 2 166 25%
Sydney 32 2 43 14 63 2 2 15 2 177 25%
Melbourne 29 3 42 14 60 2 2 15 2 171 27%
Brisbane 29 2 41 14 60 2 2 15 2 169 26%
Perth 28 3 45 14 60 2 2 15 2 172 27%
Adelaide 28 3 41 14 62 2 2 15 2 169 27%
Canberra 29 3 43 14 64 2 2 15 2 175 27%
Hobart 28 3 44 14 65 2 2 15 3 177 27%
Darwin 30 3 47 14 58 2 2 15 2 175 25%
Weighted average 30 3 43 14 62 2 2 15 2 173 26%
Non-Sydney av. 29 3 42 14 61 2 2 15 2 171 27%

Boy, Age 14: (H8b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 30 2 54 16 26 2 3 27 5 165 33%
Sydney 32 2 55 16 27 2 3 26 5 170 33%
Melbourne 29 3 53 16 27 2 3 26 5 165 36%
Brisbane 29 2 52 16 27 2 3 26 5 163 36%
Perth 28 3 57 16 27 2 3 26 5 168 36%
Adelaide 28 3 52 16 27 2 3 26 5 162 37%
Canberra 29 3 54 16 27 2 3 26 5 167 36%
Hobart 28 3 55 16 28 2 3 26 5 167 36%
Darwin 30 3 61 16 27 2 3 26 5 174 34%
Weighted average 30 3 54 16 27 2 3 26 5 167 35%
Non-Sydney av. 29 3 54 16 27 2 3 26 5 165 36%

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E2: Cost of one child—low cost budget standards—private rental—man unemployed—woman not in the labour force—December 1998—$/week

Girl, Age 3: H9c - (H2c - (H7d - H7c)) = (H9c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
32 2 20 11 7 2 3 2 1 80 18%
Sydney (No durables)^ 35 2 20 10 3 2 2 1 1 76 18%
Sydney 35 2 20 10 7 2 3 2 1 83 18%
Melbourne 30 3 19 10 7 2 3 2 1 78 19%
Brisbane 30 2 19 10 7 2 3 2 1 77 19%
Perth 29 2 21 10 7 2 3 2 1 78 19%
Adelaide 28 2 19 10 7 2 3 2 1 75 19%
Canberra 29 3 20 10 7 2 3 2 1 78 19%
Hobart 29 3 20 10 8 2 3 2 1 78 19%
Darwin 32 2 22 10 7 2 3 2 1 83 18%
Weighted average 31 2 20 10 7 2 3 2 1 79 18%
Non-Sydney av. 29 2 19 10 7 2 3 2 1 77 19%

Girl, Age 6: H7c - (H2c - (H7d - H7c)) = (H7d - H2c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
32 2 25 13 8 2 8 7 1 98 21%
Sydney (No durables)^ 35 2 26 13 5 2 7 6 1 96 21%
Sydney 35 2 26 13 9 2 8 7 1 102 21%
Melbourne 30 3 25 13 9 2 8 7 1 96 22%
Brisbane 30 2 24 13 9 2 7 7 1 95 22%
Perth 29 2 26 13 9 2 8 7 1 97 22%
Adelaide 28 2 24 13 9 2 8 7 1 94 22%
Canberra 29 3 25 13 9 2 8 7 1 97 22%
Hobart 29 3 25 13 9 2 8 7 1 97 22%
Darwin 32 2 28 13 9 2 8 7 1 102 21%
Weighted average 31 2 25 13 9 2 8 7 1 98 21%
Non-Sydney av. 29 2 25 13 9 2 8 7 1 96 22%

Boy, Age 10: H13c - (H2c - (H7d - H7c)) = (H13c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget

Sydney (Feb. 1997)
32 2 32 13 16 2 2 8 2 110 23%
Sydney (No durables)^ 35 2 33 13 13 2 2 7 1 109 23%
Sydney 35 2 33 13 17 2 2 9 2 114 23%
Melbourne 30 3 32 13 17 2 2 9 1 109 24%
Brisbane 30 2 31 13 17 2 2 9 2 107 24%
Perth 29 2 34 13 17 2 2 9 2 110 25%
Adelaide 28 2 31 13 17 2 2 9 2 106 25%
Canberra 29 3 33 13 17 2 2 9 2 109 24%
Hobart 29 3 33 13 17 2 2 9 2 109 25%
Darwin 32 2 37 13 17 2 2 9 2 115 23%
Weighted average 31 2 33 13 17 2 2 9 2 110 24%
Non-Sydney av. 29 2 32 13 17 2 2 9 2 108 24%

Boy, Age 14: H8c - (H2c - (H7d - H7c)) = (H8c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 32 2 42 15 20 2 3 9 3 128 26%
Sydney (No durables)^ 35 2 43 15 16 2 3 9 3 127 26%
Sydney 35 2 43 15 21 2 3 10 3 133 26%
Melbourne 30 3 41 15 21 2 3 10 3 127 27%
Brisbane 30 2 40 15 21 2 3 10 3 125 27%
Perth 29 2 45 15 21 2 3 10 3 129 28%
Adelaide 28 2 40 15 21 2 3 10 3 124 28%
Canberra 29 3 42 15 21 2 3 10 3 128 27%
Hobart 29 3 42 15 21 2 3 10 3 127 28%
Darwin 32 2 49 15 21 2 3 10 3 136 26%
Weighted average 31 2 42 15 21 2 3 10 3 129 27%
Non-Sydney av. 29 2 42 15 21 2 3 10 3 127 27%

Note: To estimate the cost of children, the labour force status of adults in childless and with-child households must be constant. This is achieved by adjusting the difference by the cost of jobsearch, which is (H7d - H7c).
^ Estimates based on budget standards for December 1998 without expenditure on durables with lifetimes > three years

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E3: Cost of one child—modest but adequate budget standards—private rental—man employed full-time—woman not in the labour force—December 1998—$/week

Girl, Age 3: (H9b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 30 2 25 12 17 3 3 5 2 99
Sydney 32 2 26 12 19 3 3 5 2 104
Melbourne 29 3 25 12 18 3 3 5 2 100
Brisbane 29 2 25 12 18 3 3 5 2 99
Perth 28 3 27 12 18 3 3 5 2 101
Adelaide 28 3 25 12 18 3 3 5 2 98
Canberra 29 3 26 12 19 3 3 5 2 101
Hobart 28 3 26 12 20 3 3 5 2 102
Darwin 30 3 29 12 18 3 3 5 2 104
Weighted average 30 3 26 12 19 3 3 5 2 101
Non-Sydney av. 29 3 25 12 18 3 3 5 2 100

Girl, Age 6: (H7b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 30 2 32 14 12 3 3 13 2 110
Sydney 32 2 33 14 12 3 3 13 2 113
Melbourne 29 3 32 14 12 3 3 13 2 110
Brisbane 29 2 31 14 12 3 3 13 2 109
Perth 28 3 34 14 12 3 3 13 2 111
Adelaide 28 3 31 14 12 3 3 13 2 107
Canberra 29 3 32 14 12 3 3 13 2 111
Hobart 28 3 33 14 12 3 3 13 2 111
Darwin 30 3 36 14 12 3 3 13 2 115
Weighted average 30 3 32 14 12 3 3 13 2 111
Non-Sydney av. 29 3 32 14 12 3 3 13 2 110

Boy, Age 10: (H13b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 30 2 42 14 22 2 2 14 2 132
Sydney 32 2 43 14 23 2 2 15 2 137
Melbourne 29 3 42 14 23 2 2 15 2 133
Brisbane 29 2 41 14 23 2 2 15 2 132
Perth 28 3 45 14 23 2 2 15 2 135
Adelaide 28 3 41 14 23 2 2 15 2 130
Canberra 29 3 43 14 23 2 2 15 2 134
Hobart 28 3 44 14 23 2 2 15 3 135
Darwin 30 3 47 14 23 2 2 15 2 139
Weighted average 30 3 43 14 23 2 2 15 2 134
Non-Sydney av. 29 3 42 14 23 2 2 15 2 133

Boy, Age 14: (H8b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 30 2 54 16 26 2 3 27 5 165
Sydney 32 2 55 16 27 2 3 26 5 170
Melbourne 29 3 53 16 27 2 3 26 5 165
Brisbane 29 2 52 16 27 2 3 26 5 163
Perth 28 3 57 16 27 2 3 26 5 168
Adelaide 28 3 52 16 27 2 3 26 5 162
Canberra 29 3 54 16 27 2 3 26 5 167
Hobart 28 3 55 16 28 2 3 26 5 167
Darwin 30 3 61 16 27 2 3 26 5 174
Weighted average 30 3 54 16 27 2 3 26 5 167
Non-Sydney av. 29 3 54 16 27 2 3 26 5 165

* Estimates have been adjusted by taking account of child care costs due to labour force status

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E4: Cost of one child—low cost budget standards—private rental—man employed full-time—woman not in the labour force—December 1998—$/week

Girl, Age 3: H9c - (H2c - (H7d - H7c)) = (H9c - H2c) + (H7d - H7c)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 32 2 20 11 14 2 3 2 1 86
Sydney (No durables)^ 35 2 20 10 11 2 2 1 1 84
Sydney 35 2 20 10 15 2 3 2 1 90
Melbourne 30 3 19 10 15 2 3 2 1 85
Brisbane 30 2 19 10 14 2 3 2 1 84
Perth 29 2 21 10 14 2 3 2 1 85
Adelaide 28 2 19 10 15 2 3 2 1 83
Canberra 29 3 20 10 15 2 3 2 1 86
Hobart 29 3 20 10 16 2 3 2 1 86
Darwin 32 2 22 10 14 2 3 2 1 89
Weighted average 31 2 20 10 15 2 3 2 1 86
Non-Sydney av. 29 2 19 10 15 2 3 2 1 84

Girl, Age 6: H7c - (H2c - (H7d - H7c)) = (H7d - H2c)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 32 2 25 13 8 2 3 7 1 93
Sydney (No durables)^ 35 2 26 13 5 2 2 6 1 91
Sydney 35 2 26 13 9 2 3 7 1 96
Melbourne 30 3 25 13 9 2 3 7 1 91
Brisbane 30 2 24 13 9 2 3 7 1 90
Perth 29 2 26 13 9 2 3 7 1 92
Adelaide 28 2 24 13 9 2 3 7 1 89
Canberra 29 3 25 13 9 2 3 7 1 92
Hobart 29 3 25 13 9 2 3 7 1 92
Darwin 32 2 28 13 9 2 3 7 1 97
Weighted average 31 2 25 13 9 2 3 7 1 93
Non-Sydney av. 29 2 25 13 9 2 3 7 1 91

Boy, Age 10: H13c - (H2c - (H7d - H7c)) = (H13c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 32 2 32 13 16 2 2 8 2 110
Sydney (No durables)^ 35 2 33 13 13 2 2 7 1 109
Sydney 35 2 33 13 17 2 2 9 2 114
Melbourne 30 3 32 13 17 2 2 9 1 109
Brisbane 30 2 31 13 17 2 2 9 2 107
Perth 29 2 34 13 17 2 2 9 2 110
Adelaide 28 2 31 13 17 2 2 9 2 106
Canberra 29 3 33 13 17 2 2 9 2 109
Hobart 29 3 33 13 17 2 2 9 2 109
Darwin 32 2 37 13 17 2 2 9 2 115
Weighted average 31 2 33 13 17 2 2 9 2 110
Non-Sydney av. 29 2 32 13 17 2 2 9 2 108

Boy, Age 14: H8c - (H2c - (H7d - H7c)) = (H8c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 32 2 42 15 20 2 3 9 3 128
Sydney (No durables)^ 35 2 43 15 16 2 3 9 3 127
Sydney 35 2 43 15 21 2 3 10 3 133
Melbourne 30 3 41 15 21 2 3 10 3 127
Brisbane 30 2 40 15 21 2 3 10 3 125
Perth 29 2 45 15 21 2 3 10 3 129
Adelaide 28 2 40 15 21 2 3 10 3 124
Canberra 29 3 42 15 21 2 3 10 3 128
Hobart 29 3 42 15 21 2 3 10 3 127
Darwin 32 2 49 15 21 2 3 10 3 136
Weighted average 31 2 42 15 21 2 3 10 3 129
Non-Sydney av. 29 2 42 15 21 2 3 10 3 127

Note: To estimate the cost of children, the labour force status of adults in childless and with-child households must be constant. This is achieved by adjusting the difference by the cost of jobsearch, which is (H7d - H7c).
^ Estimates based on budget standards for December 1998 without expenditure on durables with lifetimes > three years
* Estimates have been adjusted by taking account of child care and transport costs due to labour force status

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E5: Cost of more than one child—modest but adequate budget standards—private rental—man and woman employed full-time—December 1998—$/week

Two Children (Girl 6, Boy 14): (H3b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 5 85 30 73 5 6 33 7 316 38%
Sydney 78 5 88 29 80 5 6 33 7 332 39%
Melbourne 69 6 85 29 77 5 6 33 7 317 40%
Brisbane 69 4 83 29 77 5 5 33 7 313 40%
Perth 66 6 91 29 77 5 6 33 7 319 41%
Adelaide 65 6 82 29 78 5 6 33 7 311 41%
Canberra 68 6 87 29 81 5 6 33 7 322 40%
Hobart 67 6 87 29 82 5 6 33 7 324 41%
Darwin 73 6 97 29 75 5 6 33 7 331 39%
Weighted average 71 5 86 29 78 5 6 33 7 321 40%
Non-Sydney av. 68 6 85 29 78 5 6 33 7 316 40%

Three Children (Girls 3 & 6, Boy 14): (H10b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 7 111 42 179 8 15 37 8 480 49%
Sydney 78 7 114 42 206 8 15 37 8 515 49%
Melbourne 69 9 110 42 195 8 15 37 8 492 51%
Brisbane 69 6 107 42 192 8 15 37 9 484 51%
Perth 66 8 118 42 193 8 15 37 8 494 51%
Adelaide 65 8 107 42 199 8 15 37 8 489 52%
Canberra 68 9 112 42 207 8 15 37 9 507 52%
Hobart 67 9 113 42 213 8 15 37 9 513 52%
Darwin 73 8 126 42 186 8 15 37 8 503 49%
Weighted average 71 8 112 42 199 8 15 37 8 499 51%
Non-Sydney av. 68 8 111 42 195 8 15 37 8 492 51%

Four Children (Girls 3 & 6, Boys 10 & 14): (H11b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 8 153 56 239 10 37 44 10 631 55%
Sydney 78 8 158 56 274 11 36 45 11 676 56%
Melbourne 69 12 153 56 259 11 36 45 10 649 58%
Brisbane 69 7 149 56 256 11 35 45 11 638 58%
Perth 66 10 162 56 257 11 36 45 11 652 58%
Adelaide 65 10 148 56 265 11 36 45 10 645 59%
Canberra 68 12 155 56 276 11 36 45 11 668 58%
Hobart 67 12 157 56 283 11 36 45 11 677 59%
Darwin 73 10 173 56 248 11 37 45 10 663 56%
Weighted average 71 10 155 56 265 11 36 45 10 657 57%
Non-Sydney av. 68 10 153 56 260 11 36 45 10 648 58%

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E6: Cost of more than one child—low cost budget standards—private rental—man unemployed—woman not in the labour force—December 1998—$/week

Two Children (Girl 6, Boy 14): H3c - (H2c - (H7d - H7c)) = (H3c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 72 4 67 28 28 4 11 13 4 231 38%
Sydney (No durables)^ 78 4 69 28 21 4 10 12 4 229 39%
Sydney 78 4 69 28 29 4 10 14 4 239 38%
Melbourne 66 5 66 28 29 4 10 14 4 226 40%
Brisbane 67 3 64 28 29 4 10 14 4 223 40%
Perth 63 4 71 28 29 4 10 14 4 228 41%
Adelaide 63 4 64 28 29 4 10 14 4 220 41%
Canberra 65 5 68 28 29 4 11 14 4 228 40%
Hobart 64 5 68 28 30 4 11 14 4 227 40%
Darwin 72 4 77 28 29 4 11 14 4 243 39%
Weighted average 69 4 67 28 29 4 10 14 4 230 40%
Non-Sydney av. 65 4 67 28 29 4 10 14 4 225 40%

Three Children (Girls 3 & 6, Boy 14): H10c - (H2c - (H7d - H7c)) = (H10c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 5 86 38 35 6 23 15 5 286 44%
Sydney (No durables)^ 78 5 89 38 25 6 19 12 5 277 44%
Sydney 78 5 89 38 36 6 22 16 5 295 43%
Melbourne 67 7 86 38 36 6 22 16 5 281 45%
Brisbane 67 4 83 38 36 6 21 16 5 277 45%
Perth 64 6 92 38 36 6 22 16 5 284 46%
Adelaide 63 6 83 38 36 6 22 16 5 274 46%
Canberra 66 7 87 38 36 6 23 16 5 283 46%
Hobart 65 7 87 38 37 6 23 16 5 283 46%
Darwin 73 6 100 38 36 6 23 16 5 302 44%
Weighted average 70 6 87 38 36 6 22 16 5 285 45%
Non-Sydney av. 66 6 86 38 36 6 22 16 5 280 46%

Four Children (Girls 3 & 6, Boys 10 & 14): H11c - (H2c - (H7d - H7c)) = (H11c - H2c) + (H7d - H7c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 6 119 51 47 8 28 21 6 358 49%
Sydney (No durables)^ 78 6 123 51 35 8 24 17 6 348 49%
Sydney 78 6 123 51 48 8 28 21 6 369 49%
Melbourne 67 9 118 51 48 8 27 21 6 355 51%
Brisbane 67 6 114 51 49 8 26 21 6 349 51%
Perth 64 8 126 51 48 8 28 21 6 360 52%
Adelaide 63 8 114 51 48 8 27 21 6 346 52%
Canberra 66 9 120 51 49 8 28 21 6 358 51%
Hobart 65 9 120 51 49 8 28 21 7 358 52%
Darwin 73 8 137 51 48 8 28 21 6 380 50%
Weighted average 70 7 120 51 48 8 27 21 6 359 51%
Non-Sydney av. 66 8 118 51 48 8 27 21 6 354 51%

Note: To estimate the cost of children, the labour force status of adults in childless and with-child households must be constant. This is achieved by adjusting the difference by the cost of jobsearch, which is (H7d - H7c).
^ Estimates based on budget standards for December 1998 without expenditure on durables with lifetimes > three years

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E7: Cost of more than one child—modest but adequate budget standards—private rental—
man employed full-time—woman not in the labour force—December 1998—$/week

Two Children (Girl 6, Boy 14): (H3b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 5 85 30 39 5 6 33 7 282
Sydney 78 5 88 29 40 5 6 33 7 291
Melbourne 69 6 85 29 40 5 6 33 7 280
Brisbane 69 4 83 29 40 5 5 33 7 276
Perth 66 6 91 29 40 5 6 33 7 282
Adelaide 65 6 82 29 39 5 6 33 7 272
Canberra 68 6 87 29 40 5 6 33 7 281
Hobart 67 6 87 29 40 5 6 33 7 282
Darwin 73 6 97 29 40 5 6 33 7 296
Weighted average 71 5 86 29 40 5 6 33 7 283
Non-Sydney av. 68 6 85 29 40 5 6 33 7 279

Three Children (Girls 3 & 6, Boy 14): (H10b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 7 111 42 53 8 15 37 8 353
Sydney 78 7 114 42 55 8 15 37 8 364
Melbourne 69 9 110 42 55 8 15 37 8 352
Brisbane 69 6 107 42 55 8 15 37 9 347
Perth 66 8 118 42 55 8 15 37 8 356
Adelaide 65 8 107 42 55 8 15 37 8 344
Canberra 68 9 112 42 56 8 15 37 9 355
Hobart 67 9 113 42 57 8 15 37 9 357
Darwin 73 8 126 42 55 8 15 37 8 371
Weighted average 71 8 112 42 55 8 15 37 8 356
Non-Sydney av. 68 8 111 42 55 8 15 37 8 351

Four Children (Girls 3 & 6, Boys 10 & 14): (H11b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 8 153 56 70 10 37 44 10 462
Sydney 78 8 158 56 73 11 36 45 11 475
Melbourne 69 12 153 56 73 11 36 45 10 462
Brisbane 69 7 149 56 73 11 35 45 11 455
Perth 66 10 162 56 73 11 36 45 11 469
Adelaide 65 10 148 56 73 11 36 45 10 452
Canberra 68 12 155 56 74 11 36 45 11 466
Hobart 67 12 157 56 75 11 36 45 11 469
Darwin 73 10 173 56 72 11 37 45 10 487
Weighted average 71 10 155 56 73 11 36 45 10 466
Non-Sydney av. 68 10 153 56 73 11 36 45 10 461

* Estimates have been adjusted by taking account of child care costs due to labour force status

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E8: Cost of more than one child—low cost budget standards—private rental—man employed full-time—woman not in the labour force—December 1998—$/week

Two Children (Girl 6, Boy 14): H3c - (H2c - (H7d - H7c)) = (H3c - H2c) + (H7d - H7c)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 72 4 67 28 28 4 6 13 4 226
Sydney (No durables)^ 78 4 69 28 21 4 5 12 4 224
Sydney 78 4 69 28 29 4 5 14 4 234
Melbourne 66 5 66 28 29 4 5 14 4 221
Brisbane 67 3 64 28 29 4 5 14 4 218
Perth 63 4 71 28 29 4 5 14 4 223
Adelaide 63 4 64 28 29 4 5 14 4 215
Canberra 65 5 68 28 29 4 5 14 4 222
Hobart 64 5 68 28 30 4 5 14 4 222
Darwin 72 4 77 28 29 4 5 14 4 238
Weighted average 69 4 67 28 29 4 5 14 4 225
Non-Sydney av. 65 4 67 28 29 4 5 14 4 220

Three Children (Girls 3 & 6, Boy 14): H10c - (H2c - (H7d - H7c)) = (H10c - H2c) + (H7d - H7c)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 5 86 38 41 6 18 15 5 287
Sydney (No durables)^ 78 5 89 38 31 6 14 12 5 278
Sydney 78 5 89 38 43 6 17 16 5 297
Melbourne 67 7 86 38 43 6 17 16 5 284
Brisbane 67 4 83 38 43 6 17 16 5 279
Perth 64 6 92 38 43 6 17 16 5 286
Adelaide 63 6 83 38 43 6 17 16 5 276
Canberra 66 7 87 38 44 6 17 16 5 286
Hobart 65 7 87 38 45 6 18 16 5 286
Darwin 73 6 100 38 43 6 18 16 5 303
Weighted average 70 6 87 38 43 6 17 16 5 287
Non-Sydney av. 66 6 86 38 43 6 17 16 5 282

Four Children (Girls 3 & 6, Boys 10 & 14): H11c - (H2c - (H7d - H7c)) = (H11c - H2c) + (H7d - H7c)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 6 119 51 53 8 23 21 6 360
Sydney (No durables)^ 78 6 123 51 42 8 19 17 6 350
Sydney 78 6 123 51 56 8 22 21 6 372
Melbourne 67 9 118 51 55 8 22 21 6 357
Brisbane 67 6 114 51 56 8 22 21 6 351
Perth 64 8 126 51 55 8 22 21 6 362
Adelaide 63 8 114 51 55 8 22 21 6 349
Canberra 66 9 120 51 56 8 23 21 6 361
Hobart 65 9 120 51 57 8 23 21 7 361
Darwin 73 8 137 51 55 8 23 21 6 382
Weighted average 70 7 120 51 56 8 22 21 6 361
Non-Sydney av. 66 8 118 51 56 8 22 21 6 356

Note: To estimate the cost of children, the labour force status of adults in childless and with-child households must be constant. This is achieved by adjusting the difference by the cost of jobsearch, which is (H7d - H7c)
^ Estimates based on budget standards for December 1998 without expenditure on durables with lifetimes > three years
* Estimates have been adjusted by taking account of child care and transport costs due to labour force status

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E9: Costs of children—sole parent households—modest but adequate budget standards—
private rental—employed full-time—December 1998—$/week

One Child (Girl 6) : (H4b - H1a)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 29 2 32 14 50 3 2 16 2 150 28%
Sydney 32 2 33 14 57 3 2 17 2 162 29%
Melbourne 29 3 32 14 54 3 2 17 2 155 31%
Brisbane 29 2 31 14 54 3 2 17 2 153 31%
Perth 28 3 34 14 54 3 2 17 2 156 32%
Adelaide 28 3 31 14 56 3 2 17 2 154 32%
Canberra 28 3 32 14 58 3 2 17 2 160 32%
Hobart 28 3 33 14 60 3 2 17 2 162 32%
Darwin 29 3 36 14 52 3 2 17 2 157 29%
Weighted average 29 3 32 14 55 3 2 17 2 157 31%
Non-Sydney av. 28 3 32 14 54 3 2 17 2 155 31%

Two Children (Girl 6, Boy 10) : (H12b - H1a)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 73 5 74 28 102 5 5 25 4 321 46%
Sydney 78 5 76 28 117 5 5 26 4 344 47%
Melbourne 68 6 74 28 111 5 5 26 4 328 49%
Brisbane 69 4 72 28 110 5 5 26 4 323 49%
Perth 65 6 78 28 110 5 5 26 4 328 50%
Adelaide 65 6 71 28 113 5 5 26 4 323 50%
Canberra 67 6 75 28 117 5 5 26 4 335 49%
Hobart 66 6 76 28 120 5 5 26 4 339 50%
Darwin 73 6 83 28 107 5 5 26 4 337 47%
Weighted average 71 5 75 28 113 5 5 26 4 332 48%
Non-Sydney av. 67 6 74 28 111 5 5 26 4 327 49%

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E10: Costs of children—sole parent households—low cost budget standards—private rental—not in the labour force—December 1998—$/week

One Child (Girl 6) : (H4c - H1f)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 32 0 25 13 8 2 2 7 1 90 24%
Sydney (No durables)^ 35 0 26 13 5 2 2 6 1 88 24%
Sydney 35 0 26 13 8 2 2 7 1 93 24%
Melbourne 30 0 25 13 8 2 2 7 1 88 26%
Brisbane 30 0 24 13 8 2 2 7 1 87 26%
Perth 29 0 26 13 8 2 2 7 1 88 27%
Adelaide 28 0 24 13 8 2 2 7 1 85 27%
Canberra 29 0 25 13 8 2 2 7 1 88 26%
Hobart 29 0 25 13 8 2 2 7 1 88 27%
Darwin 32 0 28 13 8 2 2 7 1 93 25%
Weighted average 31 0 25 13 8 2 2 7 1 89 25%
Non-Sydney av. 29 0 25 13 8 2 2 7 1 87 26%

Two Children (Girl 6, Boy 10) : (H12c - H1f)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total % of Budget
Sydney (Feb. 1997) 72 2 57 26 25 4 5 13 2 206 42%
Sydney (No durables)^ 78 2 59 26 18 4 4 11 2 203 43%
Sydney 78 2 59 26 26 4 4 13 2 214 42%
Melbourne 66 3 57 26 26 4 4 13 2 201 45%
Brisbane 67 2 55 26 26 4 3 13 3 199 45%
Perth 63 2 61 26 26 4 4 13 2 202 46%
Adelaide 63 2 55 26 25 4 4 13 2 195 46%
Canberra 65 3 58 26 26 4 4 13 3 202 45%
Hobart 64 3 58 26 26 4 4 13 3 202 45%
Darwin 72 2 65 26 26 4 4 13 2 215 43%
Weighted average 69 2 58 26 26 4 4 13 2 205 44%
Non-Sydney av. 65 2 57 26 26 4 4 13 2 200 45%

^ Estimates based on budget standards for December 1998 without expenditure on durables with lifetimes > three years

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E11: Costs of children—sole parent households—modest but adequate budget standards—private rental—not in the labour force—December 1998—$/week

One Child (Girl 6) : (H4f - H1e)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 29 1 32 14 14 1 2 16 2 111
Sydney 32 1 33 14 15 1 2 17 2 115
Melbourne 29 1 32 14 15 1 2 17 2 111
Brisbane 29 1 31 14 15 1 1 17 2 110
Perth 28 1 34 14 15 1 2 17 2 112
Adelaide 28 1 31 14 15 1 2 17 2 109
Canberra 28 1 32 14 15 1 2 17 2 112
Hobart 28 1 33 14 16 1 2 17 2 113
Darwin 29 1 36 14 15 1 2 17 2 116
Weighted average 29 1 32 14 15 1 2 17 2 112
Non-Sydney av. 28 1 32 14 15 1 2 17 2 111

Two Children (Girl 6, Boy 10) : (H12b* - H1e)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 73 3 74 28 37 3 11 25 4 258
Sydney 78 3 76 28 39 3 10 26 4 268
Melbourne 68 4 74 28 39 3 10 26 4 256
Brisbane 69 3 72 28 39 3 9 26 4 253
Perth 65 4 78 28 39 3 10 26 4 258
Adelaide 65 3 71 28 39 3 10 26 4 250
Canberra 67 4 75 28 39 3 10 26 4 258
Hobart 66 4 76 28 40 3 10 26 4 259
Darwin 73 4 83 28 39 3 10 26 4 271
Weighted average 71 3 75 28 39 3 10 26 4 259
Non-Sydney av. 67 4 74 28 39 3 10 26 4 255

* These budget standards have been adjusted to take account of effect of labour force change, including child care, child school transport and access to concessions.

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted SPRC budget standards spreadsheets

Table E12: Net costs of child care for children—couple households—December 1998—$/week

Modest but adequate–female and male in full-time employment

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.

Girl 3
95 88 86 87 91 95 98 83 90 88
Girl 6 40 38 37 37 39 41 42 35 39 38
Boy 10 40 38 37 37 39 41 42 35 39 38
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 145 134 132 132 139 146 150 127 138 135
Girl 6, Boy 10 77 72 70 71 74 78 80 68 74 72
Girl 6, Boy 14 40 38 37 37 39 41 42 35 39 38
Boys 10,14 40 38 37 37 39 41 42 35 39 38
Girls 3,6, Boy 10 205 191 187 188 197 207 213 180 196 192
Girls 3,6, Boy 14 159 148 145 146 153 160 165 139 152 149
Girl 6, Boys 10,14 74 69 68 68 71 75 77 65 71 69
Girls 3,6, Boys 10,14 209 195 191 192 201 211 217 183 200 196
Girls 3,3,6, Boys 10,14 390 363 356 357 375 393 405 341 373 364

Modest but adequate–female in part-time employment, male in full-time employment

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.

Girl 6
4 4 3 4 4 4 4 3 4 4
Boy 10 4 4 3 4 4 4 4 3 4 4
Boy 14 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 14 4 4 3 4 4 4 4 3 4 4

Modest but adequate–female not in the labour force, male in full-time employment

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.

Girl 3
9 8 8 8 8 9 9 8 8 8
Girl 6 0 0 0 0 0 0 0 0 0 0
Boy 10 0 0 0 0 0 0 0 0 0 0
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 9 8 8 8 8 9 9 8 8 8
Girl 6, Boy 10 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 14 0 0 0 0 0 0 0 0 0 0
Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boy 10 9 8 8 8 8 9 9 8 8 8
Girls 3,6, Boy 14 9 8 8 8 8 9 9 8 8 8
Girl 6, Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boys 10,14 9 8 8 8 8 9 9 8 8 8
Girls 3,3,6, Boys 10,14 18 16 16 16 17 18 18 15 17 16

Low cost–female not in the labour force, male unemployed

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.
Girl 3 0 0 0 0 0 0 0 0 0 0
Girl 6 0 0 0 0 0 0 0 0 0 0
Boy 10 0 0 0 0 0 0 0 0 0 0
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 10 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 14 0 0 0 0 0 0 0 0 0 0
Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boy 10 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boy 14 0 0 0 0 0 0 0 0 0 0
Girl 6, Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,3,6, Boys 10,14 0 0 0 0 0 0 0 0 0 0

Low cost–female not in the labour force, male employed full-time

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.

Girl 3
8 7 7 7 7 8 8 7 7 7
Girl 6 0 0 0 0 0 0 0 0 0 0
Boy 10 0 0 0 0 0 0 0 0 0 0
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 8 7 7 7 7 8 8 7 7 7
Girl 6, Boy 10 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 14 0 0 0 0 0 0 0 0 0 0
Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boy 10 8 7 7 7 7 8 8 7 7 7
Girls 3,6, Boy 14 8 7 7 7 7 8 8 7 7 7
Girl 6, Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boys 10,14 8 7 7 7 7 8 8 7 7 7
Girls 3,3,6, Boys 10,14 15 14 14 14 15 15 16 13 15 14

Households in Bold are based on actual budget standards households, the others are separately derived
* Does not include childminding, which is out of standard work hours

Source: Based on author’s calculations using adjusted, updated and extended SPRC budget standards spreadsheets

Table E13: Net costs of child care for children—sole parent households—December 1998—$/week

Modest but adequate–female in full-time employment

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.

Girl 3
74 69 68 68 71 75 77 65 71 69
Girl 6 42 39 39 39 41 43 44 37 40 39
Boy 10 42 39 39 39 41 43 44 37 40 39
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 130 121 119 119 125 131 135 114 124 121
Girl 6, Boy 10 77 72 70 71 74 78 80 68 74 72
Girl 6, Boy 14 42 39 39 39 41 43 44 37 40 39
Boys 10,14 42 39 39 39 41 43 44 37 40 39
Girls 3,6, Boy 10 180 168 164 165 173 181 187 158 172 168
Girls 3,6, Boy 14 145 135 133 133 140 146 151 127 139 136
Girl 6, Boys 10,14 77 72 70 71 74 78 80 68 74 72
Girls 3,6, Boys 10,14 207 193 189 190 199 209 215 182 198 194
Girls 3,3,6, Boys 10,14 385 358 352 353 370 388 400 337 368 360

Low cost/modest but adequate–female not in the labour force ^

  Sydney Melbourne Brisbane Perth Adelaide Canberra Hobart Darwin Average Non- Sydney av.
Girl 3 8 7 7 7 7 8 8 7 7 7
Girl 6 0 0 0 0 0 0 0 0 0 0
Boy 10 0 0 0 0 0 0 0 0 0 0
Boy 14 0 0 0 0 0 0 0 0 0 0
Girls 3,6 8 7 7 7 7 8 8 7 7 7
Girl 6, Boy 10 0 0 0 0 0 0 0 0 0 0
Girl 6, Boy 14 0 0 0 0 0 0 0 0 0 0
Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boy 10 8 7 7 7 7 8 8 7 7 7
Girls 3,6, Boy 14 8 7 7 7 7 8 8 7 7 7
Girl 6, Boys 10,14 0 0 0 0 0 0 0 0 0 0
Girls 3,6, Boys 10,14 8 7 7 7 7 8 8 7 7 7
Girls 3,3,6, Boys 10,14 15 14 14 14 15 15 16 13 15 14

Households in Bold are based on actual budget standards households, the others are separately derived
* Does not include childminding, which is out of standard work hours
^ Assumes that the modest but adequate sole parent accesses occasional child care at a concessional rates

Source: Based on author’s calculations using adjusted, updated and extended SPRC budget standards spreadsheets

Table E14: Costs of sole parenthood—one child (girl six)—private renter—December 1998—$/week

Low cost–mother not in the labour force: (H4c - H1f) - (H7d - H2c)**

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 0 -2 0 0 -1 0 0 0 0 -3
Sydney 0 -2 0 0 -1 0 -1 0 0 -3
Melbourne 0 -2 0 0 -1 0 -1 0 0 -4
Brisbane 0 -2 0 0 -1 0 -1 0 0 -3
Perth 0 -2 0 0 -1 0 -1 0 0 -4
Adelaide 0 -2 0 0 0 0 -1 0 0 -3
Canberra 0 -2 0 0 -1 0 -1 0 0 -4
Hobart 0 -2 0 0 -1 0 -1 0 0 -4
Darwin 0 -2 0 0 -1 0 0 0 0 -3
Weighted average 0 -2 0 0 -1 0 -1 0 0 -3
Non-Sydney av. 0 -2 0 0 -1 0 -1 0 0 -4

Modest but adequate–mother employed full-time: (H4b - H1a) - (H7b - H2b)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 0 0 0 0 4 0 -1 4 0 7
Sydney 0 0 0 0 5 0 -1 4 0 8
Melbourne 0 0 0 0 5 0 -1 4 0 8
Brisbane 0 0 0 0 4 0 -1 4 0 7
Perth 0 0 0 0 5 0 -1 4 0 7
Adelaide 0 0 0 0 5 0 -1 4 0 8
Canberra 0 0 0 0 5 0 -1 4 0 8
Hobart 0 0 0 0 5 0 -1 4 0 8
Darwin 0 0 0 0 4 0 -1 4 0 7
Weighted average 0 0 0 0 5 0 -1 4 0 8
Non-Sydney av. 0 0 0 0 5 0 -1 4 0 8

Modest but adequate–mother not in the labour force: (H4f - H1e) - (H7b - H2b)*

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 0 -2 0 0 2 -2 0 4 0 2
Sydney 0 -2 0 0 3 -2 -1 4 0 2
Melbourne 0 -2 0 0 3 -2 -1 4 0 1
Brisbane 0 -2 0 0 3 -2 -1 4 0 2
Perth 0 -2 0 0 3 -2 -1 4 0 1
Adelaide 0 -2 0 0 3 -2 -1 4 0 2
Canberra 0 -2 0 0 3 -2 -1 4 0 1
Hobart 0 -2 0 0 3 -2 -1 4 0 2
Darwin 0 -2 0 0 3 -2 -1 4 0 1
Weighted average 0 -2 0 0 3 -2 -1 4 0 2
Non-Sydney av. 0 -2 0 0 3 -2 -1 4 0 1

Low cost–mother not in the labour force^: (H4c - H1f) - (H7d - H2c)

  Commodity group
  Hsng Energy Food Clothing HGS Health Transpt Leisure Per C Total
Sydney (Feb. 1997) 0 -2 0 0 -1 0 -5 0 0 -8
Sydney 0 -2 0 0 -1 0 -6 0 0 -8
Melbourne 0 -2 0 0 -1 0 -6 0 0 -9
Brisbane 0 -2 0 0 -1 0 -6 0 0 -8
Perth 0 -2 0 0 -1 0 -6 0 0 -9
Adelaide 0 -2 0 0 0 0 -6 0 0 -9
Canberra 0 -2 0 0 -1 0 -6 0 0 -9
Hobart 0 -2 0 0 -1 0 -6 0 0 -9
Darwin 0 -2 0 0 -1 0 -6 0 0 -9
Weighted average 0 -2 0 0 -1 0 -6 0 0 -9
Non-Sydney av. 0 -2 0 0 -1 0 -6 0 0 -9

* Includes a childcare adjustment to account for different labour force status
** Includes an adjustment for transport to school to account for different labour force status
^ In all but this case, the father is assumed to be employed full-time. Here, the father is unemployed.

Codes: HGS=household goods & services; Per C=personal care

Source: Based on author’s calculations using adjusted, updated and extended SPRC budget standards spreadsheets

[ Return to Top Return to Section ]

Appendix F: Regression models to estimate budget standards for other household types

Table F1: Regression model of modest but adequate budget standards as at December 1998—private renter—Sydney—$/week

Budget standards
(household types)
Total budget
($ pw)
Household members No. of bedrooms Female NILF (single)
1=yes
Female NILF (partnered)
1=yes
Female employed part-time
1=yes
Sole parent
1=yes
Pred. budget
($ pw)
Diff.
($ pw)
Female 35 Male 40 Girl 3 Girl 6 Boy 10 Boy 14
H2b Couple (FF) 526.13 1 1 0 0 0 0 1 0 0 0 0 522.93 3.20
H9b Couple (FF)+g3 715.78 1 1 1 0 0 0 2 0 0 0 0 717.43 -1.64
H7b Couple (FF)+g6 679.97 1 1 0 1 0 0 2 0 0 0 0 682.09 -2.12
H7g Couple (FN)+g6 640.78 1 1 0 1 0 0 2 0 1 0 0 640.78 0.00
H7k Couple (FP)+g6 661.07 1 1 0 1 0 0 2 0 0 1 0 661.07 0.00
H13b Couple (FF)+b10 703.52 1 1 0 0 1 0 2 0 0 0 0 702.95 0.57
H8b Couple (FF)+b14 695.89 1 1 0 0 0 1 2 0 0 0 0 698.01 -2.12
H3b Couple (FF)+2 857.64 1 1 0 1 0 1 3 0 0 0 0 857.16 0.48
H10b Couple (FF)+3 1040.87 1 1 1 1 0 1 3 0 0 0 0 1037.58 3.29
H11b Couple (FF)+4 1201.86 1 1 1 1 1 1 3 0 0 0 0 1203.51 -1.64
H1a Single F (F) 395.34 1 0 0 0 0 0 1 0 0 0 0 395.34 0.00
H4b Single F (F)+g6 557.18 1 0 0 1 0 0 2 0 0 0 1 558.26 -1.07
H4f Single F (N)+g6 499.90 1 0 0 1 0 0 2 1 0 0 1 499.90 0.00
H12b Single F (F)+2 739.34 1 0 0 1 1 0 3 0 0 0 1 738.27 1.07
H14b Single M (F) 393.55 0 1 0 0 0 0 1 0 0 0 0 393.55 0.00
Regression coefficients 251.88 129.38 127.59 180.41 145.08 165.93 160.99 14.08 -58.36 -41.31 -21.03 3.75 0.00 0.00

Codes: F=female; M=male; (F)=employed full-time; (P)=employed part-time; (N),NILF=not in the labour force; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pred. budget=predicted budget standard; Diff.=difference

Source: Based on author’s calculations

Table F2: Regression model of low cost budget standards as at December 1998—private renter—Sydney—$/week

Budget standards
(household types)
Total budget
($ pw)
Household members No. of bedrooms Female unemployed
1=yes
Male employed full-time
1=yes
Sole parent
1=yes
Pred. budget
($ pw)
Diff.
($ pw)
Female 35 Male 40 Girl 3 Girl 6 Boy 10 Boy 14
H2c Couple (UU) 391.76 1 1 0 0 0 0 1 1 0 0 389.30 2.46
H9c Couple (UN)+g3 467.17 1 1 1 0 0 0 2 0 0 0 469.01 -1.83
H7d Couple (UU)+g6 493.28 1 1 0 1 0 0 2 1 0 0 495.35 -2.06
H7c Couple (UN)+g6 485.96 1 1 0 1 0 0 2 0 0 0 486.27 -0.31
H7h Couple (FN)+g6 500.91 1 1 0 1 0 0 2 0 1 0 499.75 1.16
H7i Couple (FU)+g6 508.95 1 1 0 1 0 0 2 1 1 0 508.83 0.12
H13c Couple (UN)+b10 498.51 1 1 0 0 1 0 2 0 0 0 498.04 0.47
H8c Couple (UN)+b14 517.43 1 1 0 0 0 1 2 0 0 0 518.52 -1.10
H3c Couple (UN)+2 623.83 1 1 0 1 0 1 3 0 0 0 624.57 -0.74
H10c Couple (UN)+3 679.30 1 1 1 1 0 1 3 0 0 0 675.63 3.67
H11c Couple (UN)+4 753.89 1 1 1 1 1 1 3 0 0 0 755.73 -1.83
H1c Single F (U) 302.16 1 0 0 0 0 0 1 1 0 0 302.68 -0.52
H1f Single F (N) 294.12 1 0 0 0 0 0 1 0 0 0 293.60 0.52
H4c Single F (N)+g6 387.37 1 0 0 1 0 0 2 0 0 1 388.74 -1.36
H12c Single F (N)+2 507.92 1 0 0 1 1 0 3 0 0 1 506.55 1.36
H14c Single M (F) 318.33 0 1 0 0 0 0 1 0 1 0 319.61 -1.28
H14d Single M (U) 307.40 0 1 0 0 0 0 1 0 0 0 306.13 1.28
Regression coefficients 181.78 74.10 86.62 51.06 68.33 80.09 100.58 37.72 9.08 13.48 -10.91 0 0.00

Codes: F=female; M=male; (F)=employed full-time; (U)=unemployed; (N)=not in the labour force; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pred. budget=predicted budget standard; Diff.=difference

Source: Based on author’s calculations

Table F3: Regression model of modest but adequate budget standards as at December 1998—private renter—weighted capital city average—$/week

Budget standards
(household types)
Total budget
($ pw)
Household member No. of bedrooms Female NILF (single)
1=yes
Female NILF (partnered)
1=yes
Female employed part-time
1=yes
Sole parent
1=yes
Pred. budget
($ pw)
Diff.
($ pw)
Female 35 Male 40 Girl 3 Girl 6 Boy 10 Boy 14
H2b Couple (FF) 487.33 1 1 0 0 0 0 1 0 0 0 0.00 485.29 2.04
H9b Couple (FF)+g3 670.47 1 1 1 0 0 0 2 0 0 0 0.00 671.92 -1.45
H7b Couple (FF)+g6 636.92 1 1 0 1 0 0 2 0 0 0 0.00 638.42 -1.50
H7g Couple (FN)+g6 599.70 1 1 0 1 0 0 2 0 1 0 0.00 599.70 0.00
H7k Couple (FP)+g6 619.74 1 1 0 1 0 0 2 0 0 1 0.00 619.74 0.00
H13b Couple (FF)+b10 660.29 1 1 0 0 1 0 2 0 0 0 0.00 659.39 0.90
H8b Couple (FF)+b14 653.97 1 1 0 0 0 1 2 0 0 0 0.00 655.47 -1.50
H3b Couple (FF)+2 808.66 1 1 0 1 0 1 3 0 0 0 0.00 808.61 0.05
H10b Couple (FF)+3 986.49 1 1 1 1 0 1 3 0 0 0 0.00 983.60 2.90
H11b Couple (FF)+4 1144.61 1 1 1 1 1 1 3 0 0 0 0.00 1146.06 -1.45
H1a Single F (F) 357.68 1 0 0 0 0 0 1 0 0 0 0.00 357.68 0.00
H4b Single F (F)+g6 514.98 1 0 0 1 0 0 2 0 0 0 1.00 515.53 -0.54
H4f Single F (N)+g6 459.46 1 0 0 1 0 0 2 1 0 0 1.00 459.46 0.00
H12b Single F (F)+2 690.17 1 0 0 1 1 0 3 0 0 0 1.00 689.62 0.54
H14b Single M (F) 355.80 0 1 0 0 0 0 1 0 0 0 0.00 355.80 0.00
Regression coefficients 216.55 129.49 127.61 174.99 141.50 162.46 158.55 11.64 -56.06 -38.72 -18.68 4.72 0.00 0.00

Codes: F=female; M=male; (F)=employed full-time; (P)=employed part-time; (N),NILF=not in the labour force; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pred. budget=predicted budget standard; Diff.=difference

Source: Based on author’s calculations

Table F4: Regression model of low cost budget standards as at December 1998—private renter—weighted capital city average—$/week

Budget standards
(household types)
Total budget
($ pw)
Household members No. of bedrooms Female unemployed
1=yes
Male employed full-time
1=yes
Sole parent
1=yes
Pred. budget
($ pw)
Diff.
($ pw)
Female 35 Male 40 Girl 3 Girl 6 Boy 10 Boy 14
H2c Couple (UU) 357.78 1 1 0 0 0 0 1 1 0 0 355.84 1.94
H9c Couple (UN)+g3 429.58 1 1 1 0 0 0 2 0 0 0 431.33 -1.76
H7d Couple (UU)+g6 455.52 1 1 0 1 0 0 2 1 0 0 457.34 -1.82
H7c Couple (UN)+g6 448.24 1 1 0 1 0 0 2 0 0 0 448.56 -0.31
H7h Couple (FN)+g6 463.17 1 1 0 1 0 0 2 0 1 0 462.09 1.07
H7i Couple (FU)+g6 471.15 1 1 0 1 0 0 2 1 1 0 470.87 0.28
H13c Couple (UN)+b10 460.68 1 1 0 0 1 0 2 0 0 0 460.08 0.60
H8c Couple (UN)+b14 479.12 1 1 0 0 0 1 2 0 0 0 479.90 -0.78
H3c Couple (UN)+2 580.43 1 1 0 1 0 1 3 0 0 0 581.40 -0.98
H10c Couple (UN)+3 635.53 1 1 1 1 0 1 3 0 0 0 632.02 3.51
H11c Couple (UN)+4 709.62 1 1 1 1 1 1 3 0 0 0 711.38 -1.76
H1c Single F (U) 269.24 1 0 0 0 0 0 1 1 0 0 269.63 -0.40
H1f Single F (N) 261.25 1 0 0 0 0 0 1 0 0 0 260.85 0.40
H4c Single F (N)+g6 350.46 1 0 0 1 0 0 2 0 0 1 351.62 -1.16
H12c Single F (N)+2 465.80 1 0 0 1 1 0 3 0 0 1 464.65 1.16
H14c Single M (F) 285.07 0 1 0 0 0 0 1 0 1 0 286.42 -1.35
H14d Single M (U) 274.23 0 1 0 0 0 0 1 0 0 0 272.88 1.35
Regression coefficients 153.01 74.18 86.21 50.61 67.84 79.36 99.18 33.66 8.78 13.53 -10.73 0.00 0.00

Codes: F=female; M=male; (F)=employed full-time; (U)=unemployed; (N)=not in the labour force; g3,6=girl aged 3,6; b10,14=boy aged 10,14; +2,3,4=with 2,3,4 children; Pred. budget=predicted budget standard; Diff.=difference

Source: Based on author’s calculations

Table F5: Hypothetical budgets and costs of children for modest but adequate couple households using regression model (December 1998, Sydney, private renters)

Household characteristics Total budget ($ pw) Actual budget ($ pw) Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (FF)
No children 523 526      
One child
Girl aged 3 (G3) 717 716 194 190 191
Girl aged 6 (G6) 682 680 159 154 156
Boy aged 10 (B10) 703 704 180 177 177
Boy aged 14 (B14) 698 696 175 170 172
Two children
G3 G3 898   375   372
G3 G6 863   340   336
G3 B10 897   375   371
G6 B10 862   339   336
G6 B14 857 858 334 332 331
B10 B14 864   341   338
B14 B14 859   336   333
Three children
G3 G3 G6 1057   534   531
G3 G6 B10 1043   520   516
G3 B10 B14 1058   535   532
G6 B10 B14 1023   500   497
G3 G6 B14 1038 1041 515 515 511
B10 B10 B14 1044   521   518
B10 B14 B14 1039   516   513
Four children
G3 G6 B10 B14 1204 1202 681 676 677
G3 G3 G6 G6 1202   679   676
G6 B10 B14 B14 1198   675   672
B10 B10 B14 B14 1205   682   679
Five children
G3 G3 G6 G6 B10 1382   859   856
G3 G3 G6 B10 B14 1398   875   872
G6 B10 B10 B14 B14 1364   841   838

Households in bold have actual budget standards

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F6: Hypothetical budgets and costs of children for modest but adequate couple households using regression model (December 1998, weighted capital city average, private renters)

Household characteristics Total budget ($ pw) Actual budget ($ pw) Estimated costs of children Actual estimated costs
of children
Adjusted estimated costs
of children
Couple (FF)
No children 485 487      
One child
Girl aged 3 (G3) 672 670 187 183 185
Girl aged 6 (G6) 638 637 153 150 151
Boy aged 10 (B10) 659 660 174 173 172
Boy aged 14 (B14) 655 654 170 167 168
Two children
G3 G3 847   362   360
G3 G6 813   328   326
G3 B10 846   361   359
G6 B10 813   327   325
G6 B14 809 809 323 321 321
B10 B14 818   333   331
B14 B14 814   329   327
Three children
G3 G3 G6 1000   515   513
G3 G6 B10 988   502   500
G3 B10 B14 1005   519   517
G6 B10 B14 971   486   484
G3 G6 B14 984 986 498 499 496
B10 B10 B14 992   507   505
B10 B14 B14 988   503   501
Four children
G3 G6 B10 B14 1146 1145 661 657 659
G3 G3 G6 G6 1142   656   654
G6 B10 B14 B14 1141   656   654
B10 B10 B14 B14 1151   665   663
Five children
G3 G3 G6 G6 B10 1316   830   828
G3 G3 G6 B10 B14 1333   847   845
G6 B10 B10 B14 B14 1304   818   816

Households in bold have actual budget standards

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F7: Hypothetical budgets and costs of children for modest but adequate sole parent households using regression model* (December 1998, Sydney, private renters)

Household characteristics Total budget ($ pw) Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Single woman (F)
No children 395 395      
One child
Girl aged 3 (G3) 573   178   178
Girl aged 6 (G6) 560 557 165 162 165
Boy aged 10 (B10) 581   185   185
Boy aged 14 (B14) 574   179   179
Two children
G3 G3          
G3 G6 724   329   329
G3 B10          
G6 B10 738 739 343 344 343
G6 B14 735   340   340
B10 B14 742   346   346
B14 B14          
Three children
G3 G3 G6          
G3 G6 B10 893   498   498
G3 B10 B14          
G6 B10 B14 902   507   507
G3 G6 B14 900   505   505
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 1078   682   682
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 1269   874   874
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F8: Hypothetical budgets and costs of children for modest but adequate sole parent households using regression model* (December 1998, weighted capital city average, private renters)

Household characteristics Total Actual Estimated Actual Adjusted
  budget budget costs of estimated costs estimated costs
  ($ pw) ($ pw) children of children of children
Single woman (F)
No children 358 358      
One child
Girl aged 3 (G3) 529   172   172
Girl aged 6 (G6) 517 515 159 157 159
Boy aged 10 (B10) 538   180   180
Boy aged 14 (B14) 533   175   175
Two children
G3 G3          
G3 G6 677   3190 319  
G3 B10          
G6 B10 690 690 332 332 332
G6 B14 687   330   330
B10 B14 697   339   339
B14 B14          
Three children
G3 G3 G6          
G3 G6 B10 841   483   483
G3 B10 B14          
G6 B10 B14 851   493   493
G3 G6 B14 847   490   490
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 1021   664   664
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 1205   848   848
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F9: Hypothetical budgets and costs of children for low cost couple households using regression model (December 1998, Sydney, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (UU)
No children 389 392      
Couple (UN)
No children 380       384
One child
Girl aged 3 (G3) 469 467 89 83 85
Girl aged 6 (G6) 486 486 106 102 102
Boy aged 10 (B10) 498 499 118 114 114
Boy aged 14 (B14) 519 517 138 133 134
Two children
G3 G3 520   140   136
G3 G6 537   157   153
G3 B10 587   207   202
G6 B10 604   224   220
G6 B14 625 624 244 239 240
B10 B14 599   218   214
B14 B14 619   239   235
Three children
G3 G3 G6 626   246   242
G3 G6 B10 655   275   271
G3 B10 B14 687   307   303
G6 B10 B14 705   324   320
G3 G6 B14 676 679 295 295 291
B10 B10 B14 716   336   332
B10 B14 B14 737   357   352
Four children
G3 G6 B10 B14 756 754 376 369 371
G3 G3 G6 G6 694   314   310
G6 B10 B14 B14 843   463   459
B10 B10 B14 B14 817   437   433
Five children
G3 G3 G6 G6 B10 812   432   428
G3 G3 G6 B10 B14 845   464   460
G6 B10 B10 B14 B14 923   543   539

Households in bold have actual budget standards

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F10: Hypothetical budgets and costs of children for low cost couple households using regression model (December 1998, weighted capital city average, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (UU)
No children 356 358      
No children 347       350
One child
Girl aged 3 (G3) 431 430 84 79 81
Girl aged 6 (G6) 449 448 101 98 98
Boy aged 10 (B10) 460 461 113 110 110
Boy aged 14 (B14) 480 479 133 129 129
Two children
G3 G3 482   135   131
G3 G6 499   152   149
G3 B10 544   197   194
G6 B10 562   215   211
G6 B14 581 580 234 230 231
B10 B14 559   212   209
B14 B14 579   232   229
Three children
G3 G3 G6 583   236   233
G3 G6 B10 612   265   262
G3 B10 B14 644   296   293
G6 B10 B14 661   314   310
G3 G6 B14 632 636 285 285 282
B10 B10 B14 672   325   322
B10 B14 B14 692   345   342
Four children
G3 G6 B10 B14 711 710 364 359 361
G3 G3 G6 G6 651   304   301
G6 B10 B14 B14 794   447   443
B10 B10 B14 B14 771   424   421
Five children
G3 G3 G6 G6 B10 764   417   414
G3 G3 G6 B10 B14 796   449   445
G6 B10 B10 B14 B14 873   526   522

Households in bold have actual budget standards

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F11: Hypothetical budgets and costs of children for low cost sole parent households using regression model* (December 1998, Sydney, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Single woman (U)
No children 303 302      
Single woman (N)
No children 294 294      
One child
Girl aged 3 (G3) 379   86   86
Girl aged 6 (G6) 389 387 95 93 95
Boy aged 10 (B10) 401   107   107
Boy aged 14 (B14) 421   1270 127  
Two children
G3 G3 438   144   144
G3 G6 447   154   154
G3 B10 497   203   203
G6 B10 507 508 213 214 213
G6 B14 527   233   233
B10 B14 501   207   207
B14 B14 522   228   228
Three children
G3 G3 G6 544   250   250
G3 G6 B10 565   272   272
G3 B10 B14 598   304   304
G6 B10 B14 607   314   314
G3 G6 B14 586   292   292
B10 B10 B14 619   325   325
B10 B14 B14 639   346   346
Four children
G3 G6 B10 B14 666   372   372
G3 G3 G6 G6 612   319   319
G6 B10 B14 B14 745   452   452
B10 B10 B14 B14 719   426   426
Five children
G3 G3 G6 G6 B10 730   436   436
G3 G3 G6 B10 B14 762   469   469
G6 B10 B10 B14 B14 826   532   532

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F12: Hypothetical budgets and costs of children for low cost sole parent households using regression model* (December 1998, weighted capital city average, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Single woman (U)
No children 270 269      
Single woman (N)
No children 261 261      
One child
Girl aged 3 (G3) 342   81   80
Girl aged 6 (G6) 352 350 91 89 90
Boy aged 10 (B10) 363   102   102
Boy aged 14 (B14) 383   122   122
Two children
G3 G3 400   139   138
G3 G6 410   149   148
G3 B10 455   194   194
G6 B10 465 466 204 205 203
G6 B14 484   224   223
B10 B14 462   201   201
B14 B14 482   221   221
Three children
G3 G3 G6 501   240   240
G3 G6 B10 523   262   261
G3 B10 B14 554   293   293
G6 B10 B14 564   303   303
G3 G6 B14 542   282   281
B10 B10 B14 575   315   314
B10 B14 B14 595   334   334
Four children
G3 G6 B10 B14 622   361   361
G3 G3 G6 G6 569   308   308
G6 B10 B14 B14 697   436   435
B10 B10 B14 B14 675   414   413
Five children
G3 G3 G6 G6 B10 682   421   421
G3 G3 G6 B10 B14 713   453   452
G6 B10 B10 B14 B14 776   515   515

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F13: Hypothetical budgets and costs of children for modest but adequate couple households using regression model—female not in the labour force* (December 1998, Sydney, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (FN)
No children 522       527
One child
Girl aged 3 (G3) 631   109   103
Girl aged 6 (G6) 641 641 119 113 113
Boy aged 10 (B10) 662   140   134
Boy aged 14 (B14) 697   175   170
Two children
G3 G3          
G3 G6 725   203   197
G3 B10          
G6 B10 784   262   257
G6 B14 816   294   288
B10 B14 823   301   295
B14 B14          
Three children
G3 G3 G6          
G3 G6 B10 845   323   318
G3 B10 B14          
G6 B10 B14 948   426   421
G3 G6 B14 887   364   359
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 1002   480   475
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 1025   503   497
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F14: Hypothetical budgets and costs of children for modest but adequate couple households using regression model—female not in the labour force* (December 1998, weighted capital city average, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (FN)          
No children 485       489
One child          
Girl aged 3 (G3) 590   105   101
Girl aged 6 (G6) 600 600 114 111 111
Boy aged 10 (B10) 621   135   132
Boy aged 14 (B14) 655   170   167
Two children          
G3 G3          
G3 G6 683   197   194
G3 B10          
G6 B10 739   254   250
G6 B14 770   285   281
B10 B14 779   294   290
B14 B14          
Three children          
G3 G3 G6          
G3 G6 B10 800   314   311
G3 B10 B14          
G6 B10 B14 900   415   412
G3 G6 B14 840   355   351
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 954   469   466
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 977   491   488
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs
Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F15: Hypothetical budgets and costs of children for modest but adequate sole parent households—not in the labour force—using the regression model* (December 1998, Sydney, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Single woman (N)
No children 379 384      
One child
Girl aged 3 (G3) 490   111   106
Girl aged 6 (G6) 500 500 121 115 115
Boy aged 10 (B10) 522   143   138
Boy aged 14 (B14) 558   179   174
Two children
G3 G3          
G3 G6 586   206   201
G3 B10          
G6 B10 645   266   261
G6 B14 677   298   292
B10 B14 683   304   299
B14 B14          
Three children
G3 G3 G6          
G3 G6 B10 705   326   320
G3 B10 B14          
G6 B10 B14 809   430   425
G3 G6 B14 746   367   362
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 862   483   477
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 883   504   499
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F16: Hypothetical budgets and costs of children for modest but adequate sole parent households—not in the labour force—using the regression model* (December 1998, weighted capital city average, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Single woman (N)
No children 342 347      
One child
Girl aged 3 (G3) 450   108   103
Girl aged 6 (G6) 459 459 118 112 112
Boy aged 10 (B10) 482   140   135
Boy aged 14 (B14) 517   175   170
Two children
G3 G3          
G3 G6 544   202   197
G3 B10          
G6 B10 600   258   253
G6 B14 631   289   284
B10 B14 641   299   294
B14 B14          
Three children
G3 G3 G6          
G3 G6 B10 660   318   313
G3 B10 B14          
G6 B10 B14 762   420   415
G3 G6 B14 700   358   353
B10 B10 B14          
B10 B14 B14          
Four children
G3 G6 B10 B14 815   473   468
G3 G3 G6 G6          
G6 B10 B14 B14          
B10 B10 B14 B14          
Five children
G3 G3 G6 G6 B10          
G3 G3 G6 B10 B14 836   494   489
G6 B10 B10 B14 B14          

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F17: Hypothetical budgets and costs of children for low cost couple households using regression model—male employed full-time* (December 1998, Sydney, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (UU)
No children 389 392      
Couple (FN)
No children 394       404
One child
Girl aged 3 (G3) 490   96   86
Girl aged 6 (G6) 500 501 106 96 95
Boy aged 10 (B10) 512   118   107
Boy aged 14 (B14) 532   138   128
Two children
G3 G3 549   155   144
G3 G6 558   165   154
G3 B10 608   214   203
G6 B10 618   224   213
G6 B14 638   244   234
B10 B14 612   218   208
B14 B14 633   239   228
Three children
G3 G3 G6 655   261   250
G3 G6 B10 676   283   272
G3 B10 B14 709   315   304
G6 B10 B14 718   324   314
G3 G6 B14 697   303   292
B10 B10 B14 730   336   325
B10 B14 B14 750   357   346
Four children
G3 G6 B10 B14 777   383   372
G3 G3 G6 G6 723   330   319
G6 B10 B14 B14 856   463   452
B10 B10 B14 B14 830   437   426
Five children
G3 G3 G6 G6 B10 841   447   437
G3 G3 G6 B10 B14 873   480   469
G6 B10 B10 B14 B14 937   543   532

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

Table F18: Hypothetical budgets and costs of children for low cost couple households using regression model—male employed full-time* (December 1998, weighted capital city average, private renters)

Household characteristics Total budget
($ pw)
Actual budget
($ pw)
Estimated costs of children Actual estimated costs of children Adjusted estimated costs of children
Couple (UU)
No children 356 358      
Couple (FN)
No children 361       370
One child
Girl aged 3 (G3) 452   92   82
Girl aged 6 (G6) 462 463 101 93 92
Boy aged 10 (B10) 474   113   103
Boy aged 14 (B14) 493   133   123
Two children
G3 G3 510   150   140
G3 G6 520   159   150
G3 B10 565   205   195
G6 B10 575   215   205
G6 B14 595   234   224
B10 B14 573   212   202
B14 B14 593   232   222
Three children
G3 G3 G6 612   251   241
G3 G6 B10 633   272   263
G3 B10 B14 664   304   294
G6 B10 B14 674   314   304
G3 G6 B14 653   292   282
B10 B10 B14 686   325   315
B10 B14 B14 706   345   335
Four children
G3 G6 B10 B14 732   372   362
G3 G3 G6 G6 679   319   309
G6 B10 B14 B14 807   447   437
B10 B10 B14 B14 785   424   415
Five children
G3 G3 G6 G6 B10 793   432   422
G3 G3 G6 B10 B14 824   463   453
G6 B10 B10 B14 B14 887   526   516

Households in bold have actual budget standards
* The regression has been supplemented by information on child care costs

Source: Based on author’s calculations using adjusted and extended SPRC budget standards spreadsheets

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Endnotes

  1. The modest but adequate budget standards for a couple with four children (H11a and H11b) failed to include costs for childcare for the 10-year-old boy. The addition of this cost increased these budgets by approximately
    $40 per week. Also, the active leisure weights for the full-time employed male in the H7a and H7b leisure spreadsheets were found to be incorrect. The correction reduced the budgets by approximately $5 per week, with an equivalent reduction in the estimate for the cost of a six-year-old girl at the modest but adequate living standard level.
  2. Although not relevant to the specific budget standards prepared by SPRC, sole parents would face lower childcare costs for a three-year-old girl. This is because their lower income levels (required to meet their budget standard) would entitle them to more Childcare Assistance (or, from 1 July 2000, Child Care Benefit) than the higher income couple household.
  3. To be accurate, the couple (both with and without children) also are not allocated these activities. SPRC argues that couples have themselves for company. However, the budget standards do not explicitly provide adult company for sole parents.
  4. There is also an argument for including child minding for the occasions when the adults attend the cinema without the children. However, this would also need to be added to the couple-with-children household. In terms of the costs of sole parenthood, these may cancel each other out, but would increase the costs of children slightly. Alternatively, the child minding whilst attending the cinema could be assumed to be free; being provided by friends and relatives.
  5. In the spreadsheets, household H12 (sole parent with two children) had been allocated the game, but H4 (sole parent with one child) had not. SPRC’s report is unclear on its intended allocation (Saunders et al. 1998, p.396).
  6. If the already detailed leisure adjustments are also made, the cost of sole parenthood increases by two and six dollars per week respectively.
  7. The single non-aged male also goes to pop concerts, but stops this when he becomes partnered regardless of the presence or absence of children. At the low cost level, whilst single non-aged adults without children go to the cinema, the adults in all households with children and couples do not, so in this respect, there is a greater level of leisure activity for single adults. In contrast, all adults at the modest but adequate level household attend the cinema.
  8. Whiteford and Henman (1999) also make this observation in the context of SPRC’s treatment of the cost of household durables.
  9. Of these three new household types, the first was created to fill an obvious gap in SPRC’s budget standards.
    The second was created to more accurately estimate the cost of children and of sole parenthood. The third was created for policy interest. They also help to provide more nuanced estimates of the costs of job search and employment.
  10. I thank Bill Mudd for the provision of these data.
  11. Table 4 of Saunders (1998) does not include this eight per cent reduction, but Table 5 does.
  12. Again, it should be noted that these costs of children estimates for February 1997 are based on the corrections and adjustments mentioned in Section 3.1, but include the full costs of household durables. Accordingly, they will vary from those provided in the initial SPRC report (Saunders et al. 1998, Tables 14.10, 14.11 & 14.12).
  13. Childcare costs have been obtained from several sources: the updated December 1998 budget standards; the capital city budget standards derived from the updated standards; and from estimating for February 1997 gross and net child care costs for a range of other household types using SPRC’s original method and then updating them according to the method described earlier.
  14. Childcare Assistance was phased out and replaced by Child Care Benefit on 1 July 2000.
  15. As a couple, the mother was assumed to look after the children and the father was the breadwinner. Due to his private income, the household was assumed to be not entitled to concessions. When the couple separate, the mother is assumed to maintain the same lifestyle by child and/or spousal support. However, with no independent income (that is not in the labour force), she would be entitled to pension concessions.

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Content Updated: 19 June 2013