A great country, but it ain't cheap

In the past 10 years prices have soared around 200 per cent for average items such as bread, wine cigarettes and petrol as households battle against a strong Australian dollar while the rest of the global economy slows.

 

Source: PerthNow

AUSTRALIA has become one of the most expensive places on the planet, as the price for everything from a Big Mac to an iPhone exceeds that of most other major developed countries.

The surge in prices over the past decade has seen Sydney become the most expensive destination for a weekend getaway in the world, more than double the cost of New York.

In the past 10 years prices have soared around 200 per cent for average items such as bread, wine cigarettes and petrol as households battle against a strong Australian dollar while the rest of the global economy slows.

Despite a slight fall in prices over the past 12 months, Australia and Japan are rated by the Deutsche Bank survey as the most expensive in the world, while the US is the cheapest country.

Only France and Singapore are more expensive locations for a pint of beer. Australian pubs charge $US8.20, almost double the price in the UK, New Zealand and Germany.

Deutsche Bank global strategist Sanjeev Sanyal said prices in Australia are among the most expensive in the world, overall costsbeing higher than most of its rivals and most other cities offering some cheaper services.

"Singapore is a cheap place to get an MBA, but not if you want a car or a pair of Levi's jeans. Indian cities are usually cheap, but pizzas cost the same as New York," he said.

"But Australia and Japan are very expensive across a wide range of products, while the United States is generally the cheapest developed country."

And it is not just services that are overpriced. The cost of a new Volkswagen Golf at $US37,442 is almost $US8000 than in the UK and more than $US10,000 more expensive than buying the same model in New York.

The survey just shows average prices in US dollars and lets the price comparisons tell the story rather than drilling down into the data.

Item/Australian price/US price

Big Mac/$4.90/$4.37

Two litre bottle of Coca-Cola/$3.61/$2.35

Pint of beer/$8.20/$6.00

Pair of Levi's 501/$115/$56

iPhone/$819.33/$649

20 pack of Marlboro/$17.21/$12.31

Cab ride for 3km/$10.77/$10.75

Movie tickets/$17.95/$13

Men's haircut in CBD/$27.69/$30

Daily car rental/$95.50/$95.80

Five-tar hotel room/$933(Sydney)/$419(New York)

New Volkswagen Golf/$37,442/$26,044

*Deutsche Bank research. All prices in US dollars

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You're warned: The great health grab

Health insurance premiums rose this week. Source: Supplied

HEALTH funds that make a profit inflicted above average premium rises on their members this week, while most members of not-for-profit funds faced lower than average increases.

The body that represents 18 not-for-profit funds says health fund members shocked by their premium rise could do better if they shopped around.

Three of the biggest health funds Medibank Private, BUPA and NIB now operate to make a profit and they all increased their premiums by more than the average 5.6 per cent industry rise.

Not-for-profit funds funds like HBF, Health Partners, Westfund, Healthguard and St Luke's increased their premiums by less than 4 per cent the Department of Health website shows.

Data held by government-run health insurance watchdogs also shows the for-profit funds BUPA and NIB made profits well above the industry average.

Hirmaa, the industry body that represents 18 community based not-for-profit health funds, says their premiums rose by less because they were focused on their members and not on satisfying the financial needs of shareholders.

''The role of for-profit funds is to make a profit, it is expected by their shareholders,'' Hirmaa executive director Ron Wilson said.

Not- for-profit funds needed to keep in surplus but only at a level that returned maximum value to members rather than shareholders, he said.

''There is no doubt that not-for-profits have policies that are cheaper than the for-profits,'' he said.

''I think it is sad that a lot of people looking to buy private health insurance don't understand the difference,'' he said.

In the past most health funds were mutual organisations with the premiums paid into the fund used to operate the business and cover benefits for members.

But now eight health funds, including three of the top five, operate on a for-profit basis including the government-owned Medibank Private fund which now pays hundreds of millions of dollars a year in dividends to the government.

Medibank Private raised its premiums by 6.2 per cent this week and other for-profit funds NIB raised its premiums by 6.5 per cent and BUPA by 5.8 per cent.

The only open membership for- profit funds with lower than average rises were Australian Unity which increased its premiums by 5.23 per cent and Grand United Corporate whose premiums rose by 3.2.

HCF which is a not-for- profit fund raised its premiums by 5.74 per cent, slightly above the national average of 5.6 per cent.

More than 91,000 people are pursuing an additional way to save on health fund costs by registering for the Big Health Insurance Switch.

In partnership with consumer network One Big Switch, News Limited has created the first discount cover available to all Australians.

It is expected the Big Health Insurance Switch offer will be announced next week and nearly 100,000 readers have registered.

It is hoped a price cut for registering with the One Big Switch will be up to 10 per cent.  

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