It’s not just the colder weather Australians should prepare for. As the nation heads into winter, many people are about to pay more for electricity, health insurance and their student loan repayments.
After months of climbing grocery prices and higher mortgage repayments for thousands of homeowners, health insurance premiums, HELP debts and energy bills for some households and small businesses have all either grown or are about to grow.
Here’s what’s changing, and what experts say you can do to ease the financial strain.
ENERGY BILLS
Electricity prices will rise again from July 1 for households and small businesses in some parts of Australia.
The Australian Energy Regulator last week confirmed electricity prices will increase by between 20 and 25 per cent from July 1 in NSW, South Australia southeast Queensland.
That increase is higher than the draft offer released by the regulator in March, which set out a 20 to 22 per cent increase.
About 600,000 customers on the default energy offer face significant price hikes over the 2023-2024 financial year, despite the federal government’s intervention in the energy market and wholesale power prices being lower than they were this time last year.
About 9 per cent of customers are on a default market rate, which acts as a safety net or benchmark to ensure users aren’t overcharged.
From July 1, residential customers on the default market rate will see prices increase of between 19.6 and 24.9 per cent, while small business customers face increases of between 14.7 per cent and 28.9 per cent.
In Victoria, residential customers and small businesses will see up to a 27 per cent increase in electricity prices, according to the state’s Essential Services Commission.
HECS DEBTS
Millions of graduates will watch their Higher Education Loans Program (HELP) debts – commonly known as HECS – inflate to their highest level in the three decades since the government scheme began operating.
There is no interest charged on HELP loans but indexation is added on June 1 each year to adjust debts according to the consumer price index so they maintain a more real value in line with the cost of living.
The loans are being indexed in line with the inflation rate of 7.1, meaning Australians with student loans face an average increase of more than $1700 a year on their debts under the new rate, which came into force on Thursday.
The federal government last week stared down calls from crossbench MPs and the National Students Union to stage a last-minute intervention to reduce the indexation rate to a more manageable size or even freeze it all together.
HEALTH INSURANCE PREMIUMS
Private health insurance premiums — the regular payment customers make to keep their insurance policies active — are set to increase by an average of 2.90 in 2023.
The increase technically came into force in April, but many of the major health funds have delayed passing them on.
Medibank and ahm delayed their premium increases until June, with the cost now set to increase by 2.96 per cent.
AIA has delayed their premium increases until July 1, when the cost will rise by 1.69 per cent.
HCF and nib have delayed their premium increases until September 1, when the costs will lift by 3.3 per cent and 2.72 per cent respectively.
Bupa has pushed back it premium increase until October 1 — six months later than usual — when the cost will increase by 3.39 per cent.
A survey by finance comparison website Finder of 575 people with private health insurance found 44 per cent had taken out the cover for “peace of mind” just in case they became sick or injured.
The research found 13 per cent have health insurance as they rely heavily on their extras cover for dentistry and physio, while 1 in 8 have cover to avoid lengthy wait times in the public system.
Nearly 1 in 10 are insured so they can choose the hospitals and specialists they are treated by, while 8 per cent opted in to avoid the Medicare Levy Surcharge.
Australian Prudential Regulation Authority figures show 45 per cent of Australians have private hospital cover, with almost 12 million people insured.
ADDING TO THE STRAIN
Graham Cooke, head of consumer research at comparison website Finder, said the imminent increases to energy bills and health insurance premiums — coupled with HECS debt indexation for graduates — would add a “significant strain” on what was already a stressful financial situation for many Australians.
“All of these are going to affect everybody, but they’re going to more severely affect younger Australians who have less of a savings buffer saved up and it’s just going to make things worse temporarily for that group,” Mr Cooke said.
LOOKING FORWARD
Mr Cooke said it was difficult to predict exactly what other bills would increase in price over the rest of the year with inflation believed to be gradually subsiding but the future still uncertain.
He cited data from Finder’s consumer sentiment survey which found nearly 40 per cent of Australian household said paying for groceries was a source of financial stress, double the number of households who said the same in the past.
About 40 per cent of households say their rent or mortgage is a source of financial stress, Mr Cooke said.
And this number is likely to only increase as thousands of mortgage holders watch their fixed-rate loans expire and switch to variable loans beholden to high interest rates set by the Reserve Bank of Australia.
Mr Cooke said the financial outlook over the coming months remained uncertain.
“Economists (are) predicting potentially one or two more cash rate increases before (the RBA) starts to realise we are hopefully near the end of these inflationary pressures and things will start to improve kind of towards the end of this year and next year,” he said.
“But really, nobody really knows exactly what’s around the corner.”
WHAT CAN BE DONE?
Mr Cooke said “shopping around” for better deals on household bills such as those for energy, insurance and even credit cards by seeking out new providers and possibly switching was the best way to save money quickly.
The same could be done by mortgage holders wanting to save on their home loan repayments, he said.
“You know, if you feel your interest rate is too high on your home loan, call your bank and see if they’ll do anything about that interest rate because often they’ll be willing to budge on the interest rate you’re paying rather than you go to another bank,” he said.
“But if they don’t call around the other banks to see if you get a better deal.”
And the second way to combat the increased cost of living is even simpler, Mr Cooke said.
“It sounds pretty boring, but it’s important to mention savings accounts,” he said.
“The one main tip I would have for anybody who’s feeling any financial stress is to open a savings account with an online bank with a good ongoing rate, not a rate that disappears after three or four months, one that you can have indefinitely.
“And put as much money as you can in there and try and set up a direct debit that money drops in every time you get paid and build up that savings buffer to insulate yourself.”