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AUSTRALIANS are paying more for transport costs with government taxes on car ownership showing the biggest increase and potentially serving as the primary dampener on the current slide in new-vehicle sales.

In a report by the Australian Automobile Association (AAA) titled ‘June 2019 Transport Affordability Index’, the fuel excise, registration, comprehensive third-party insurance and licensing “alone cost the average two-car family about $2661 per annum for city households and $2608 per annum for the regional households”.

It said typical capital city households now spend 14.7 per cent of their income on transport with the costs rising twice that of inflation.

In the June quarter, national average household total weekly transport costs were about $326, up from $317 in the previous quarter. This was a rise of about 2.8 per cent – well above the quarter’s rate of general inflation, which was 0.6 per cent.

In the last financial year, the CPI increased by 1.6 per cent but annual transport costs for a typical metropolitan Australian household rose from $18,046 to $18,576 – a jump of 2.9 per cent.

The typical regional household’s annualised transport costs reached $15,040 per year – up from $14,466 – a jump of almost four per cent.

The AAA said typical households are spending between 13.2 per cent (regional centres) and 14.7 per cent (capital cities) of their income on transport – up from 12.6 per cent and 14.3 per cent respectively in the previous quarter.

The increase in transport costs over the June quarter was driven by changes in two cost categories:

  • Car loan payments as the average upfront purchasing costs of new vehicles increased over the quarter by an average of $1132.
  • Fuel prices rose in all capital cities and regions.

But costs in public transport fees and insurance (Sydney only), and car maintenance (price changes for fixed-price servicing), decreased over the quarter.

“The upfront cost of purchasing a new car increased on average for the typical city household by about $1132,” the report said.

“This was mainly because Toyota increased the price of its HiLux and Mazda removed the baseline Mazda 3 Neo Sport from sale, replacing it with the more expensive G20 Pure.

“As a result, the average cost of car loan payments increased by about $5.14 per week or $262 per annum.”

The AAA found that in the June 2019 quarter, Sydney became the cheapest capital city to take out a loan for a new car.

“Upfront purchasing prices for new cars rose in Sydney, but not as much as in other capitals,” the report said.

“Melbourne became the most expensive capital city for car loan payments, but Adelaide recorded the highest increase in these payments because upfront purchasing costs rose more than in the other cities.

“Regional households incurred the same costs in this category as their capital city counterparts because it is assumed that interest rates and new-car purchase costs are the same in regional and capital city locations.”

AAA managing director Michael Bradley said: “Transport is a significant and unavoidable cost for households. Policymakers around the country must recognise this problem and seek policy solutions that can help keep rising costs in check.”

At the same time as the AAA report, the National Retail Association (NRA) found that Australian retail sales stalled in the month of July and called it “a bad sign for the sector”.

Retail turnover dropped by 0.1 per cent for the first month of this financial year, according to the Australian Bureau of Statistics.

NRA CEO Dominique Lamb said the July sales slump did not bode well for a sector that has struggled throughout much of 2019.

“The July results are not good news for retailers, we were hopeful of far better figures following a strong sales performance for June,” she said.

“A drop in turnover shows that consumer confidence remains stubbornly low, despite measures such as the personal tax cuts and reduction in interest rates.”

Ms Lamb said retail is one of the largest sectors in Australia and the biggest employer of young people.

“Its importance to the overall economy cannot be overstated,” she said.

“The NRA urges Aussie shoppers to not shy away from spending any extra money they’ve received in tax cuts or the drop in interest rates at their local retail outlet.”

By Neil Dowling

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