A study published by the Bureau of Communications,. Arts and Regional Research delves into the realm of telecommunications spending among Australian households, utilising data from the Household Income and Labour Dynamics in Australia (HILDA) survey. The primary objective is to pinpoint vulnerable households that face a heightened risk of digital exclusion, enhancing the understanding of the dynamics at play.
Drawing on the groundwork laid by the Bureau (BCARR 2017; 2020) and the research by Breunig and McCarthy (2020), their analysis extends the econometric methodology developed by the latter. To evaluate the affordability of telecommunications for households, they incorporate additional variables that have proven crucial in assessing telecommunications affordability.
Their paper employs regression modelling to identify two distinct low-income household groups susceptible to potential digital exclusion. The first group, termed ‘low-income, high spending,’ exhibits a disproportionately higher expenditure on telecommunications relative to their income, raising concerns about the sustainability of this financial behaviour. On the other hand, the second group, labelled ‘low-income, low spending,’ allocates significantly less of their income to telecommunications, potentially hindering their ability to fully capitalise on the benefits of digital connectivity.
Key revelations from their analysis include a positive trend in the affordability of telecommunications services in Australia. Households now allocate a smaller proportion of their disposable income to telecommunications, dropping from a peak of 4.1% in 2008 to 3% in 2021. This improvement in affordability is attributed to an upswing in household disposable income coupled with a noticeable reduction in nominal telecommunications spending.
Furthermore, the Bureau’s findings underscore the correlation between household income and telecommunications spending. Analogous to essential needs like food, the share of disposable income spent on telecommunications diminishes as household income rises. Notably, low-income households devote a more substantial portion of their budget to telecommunications compared to their higher-income counterparts.
When adjusting for income and other pertinent factors, the study identifies specific household demographics associated with lower telecommunications spending relative to disposable income. These include single-person households, those with poor English proficiency, older households, Aboriginal or Torres Strait Islander households, immigrant households, those with lower education levels, or households with members experiencing disability or long-term health conditions. Such low spending patterns may signify a lack of affordability for these groups, putting them at an elevated risk of potential digital exclusion.
Conversely, households exhibiting higher telecommunications spending relative to disposable income are found among those with members working from home, facing financial stress, being younger or middle-aged, having children, residing in rural areas, or inhabiting more prosperous localities. This heightened spending may be indicative of financial difficulties, inappropriate internet bundles, increased internet demand, or elevated costs associated with telecommunications service delivery.
The study also unveils a concerning trend, indicating that the share of low-income households with unsustainable spending on telecommunications has increased from 5.6% in 2010 to 5.8% in 2021, reaching its highest level in 12 years. Membership in this group is more likely for households with members working from home, younger or middle-aged individuals, those facing financial stress, with children, identifying as Aboriginal or Torres Strait Islander, immigrants from non-English speaking backgrounds, larger household sizes, or residing in rural areas.
Lastly, the ‘low-income, low spending’ households, constituting approximately 0.6% of all Australian households, spend less than one percent of their disposable income on telecommunications. This places them at a notable risk of potential digital exclusion, underscoring the importance of addressing the disparities in telecommunications spending among various demographic groups.